'Bloomberg The Open' Full Show (04/01/2022)
JONATHAN: WHAT A JOBS REPORT. FROM YORK CITY THIS MORNING, GOOD MORNING. WITH EQUITY FUTURES A LITTLE BIT FIRMER TO COOKOFF -- TO KICKOFF YOU DO. -- TO KICKOFF Q2. THE COUNTDOWN TO THE OPEN STARTS RIGHT NOW.
>> EVERYTHING YOU NEED TO GET SET FOR THE START OF U.S. TRADING. THIS IS "BLOOMBERG: THE OPEN" WITH JONATHAN FERRO. JONATHAN: LIVE FROM NEW YORK, WE BEGIN WITH THE BIG ISSUE. THE FED UNDER PRESSURE.
>> HOW HIGH DOES THE FED HAVE TO HIKE? >> CPI HEADLINE INFLATION. >> THE FED WILL TRY TO BE DATA-DEPENDENT. >> THE MARKET FROM A PRICING STANDPOINT -- >> SUGGEST THERE IS A 50 BASIS POINT HIKE ON THE HORIZON. >> THEY WILL DO 50 BASIS POINTS. >> INFLATION WILL BE INSANE FOR MARCH.
>> THE FED IS KEEN ON TRANSPORTING THE RATE HIKES. >> THE FED IS LATE, THE FED KNOWS IT IS LATE. >> CALMLY WHEN THEY GET THE 3% INFLATION AND THEN WE WILL STOP. JONATHAN: JOINING US AS MIKE MCKEE IN D.C.. THIS IS SOLID. MICHAEL:
WE HAD A LOT OF HIRING GOING ON IN THE MONTH OF MARCH AS EMPLOYERS TRY TO STAFF UP STUFF 430,000 JOBS CREATED IN MARCH COMPARED TO 750,000 IS THE REVISED NUMBER, 95,000 ADDED TO THE NUMBERS THIS TIME, WHICH BRINGS YOU TO 526,000 NEW JOBS WE DO NOT KNOW ABOUT LAST MONTH. YOU HAVE TO GO BACK TO LAST JULY TO SEE A NUMBER THAT WAS NOT REVISED HIGHER. 431,000 MAY BE ONLY THE STARTING POINT. UNEMPLOYMENT DROPS TO 3.6%. ALLOW MORE PEOPLE INTO THE
LABOR FORCE AND MORE HIRING THAN UNEMPLOYMENT. THE PARTICIPATION RATE UP TO 62.4%. AVERAGE HOURLY EARNINGS UP TO 5.6%.
THE FED DOES NOT WANT TO SEE THAT. WHERE WERE THE JOBS? LEISURE AND HOSPITALITY. BARTENDERS, WAITRESSES, PEOPLE WORKING IN HOTELS. NOT AS MANY AS LAST MONTH BUT
WHEN YOU LOOK THROUGH THIS REPORT IT IS A LOT OF JOBS CREATED IN A LOT OF DIFFERENT AREAS. A BROAD REPORT INSTEAD OF A COUPLE AREAS. PROFESSIONAL AND BUSINESS SERVICES UP 102,000.
RETAIL 49,000. MANUFACTURING 38,000. LET'S GO BACK INTO THE PROBLEM FOR THE FED. WHEN UNEMPLOYMENT FALLS WE KNOW WAGES RISE. HISTORICALLY THAT HAS BEEN THE CASE. YOU SEE THE CIRCLE IN THE MIDDLE. THAT WAS 1999 WHEN WE GOT DOWN TO 3.5% UNEMPLOYMENT. WAGES ROSE AND INFLATION ROSE.
LOOK AT WHERE WAGES AND INFLATION ARE NOW IS UNEMPLOYMENT GETS BACK TO THE SAME LEVEL IT WAS IN 1999. WHAT IS THE FED GOING TO DO ABOUT THAT? DO THEY THINK IT IS UNUSUAL BECAUSE OF THE PANDEMIC? CAN THEY BRING DOWN THE WAGE LEVEL AT THE INFLATION LEVEL FAST ENOUGH IT DOES NOT GET EMBEDDED IN SOCIETY? JONATHAN: WHAT A MEETING WE HAVE THE FEDERAL RESERVE IN EARLY MAY. JOINING US IS RICK RIEDER. REACT TO THIS. IT LOOKS DECENT. RICK: IT LOOKS DECENT. THE DATA IS STRONG.
WHEN PEOPLE FIRST SAW IT THEY SAID THE 430,000 JOBS WAS LITTLE BELOW EXPECTATIONS. WHAT PEOPLE HAVE TO START FACTORING IN IS THERE'S NOT ENOUGH PEOPLE TO COME BACK INTO THE WORKFORCE. THERE ARE 1.6 MILLION PEOPLE WERE NOT IN THE WORKFORCE WHO WERE IF YOU GO BACK A COUPLE OF YEARS WHEN WE WERE PRETTY CLOSE TO FULL EMPLOYMENT. TO BRING PEOPLE BACK IN IT WILL BE HARD TO SEE 500,000 JOBS IN ANY OF THE SUBSEQUENT MONTHS. THERE IS 11 MILLION JOB
OPENINGS. YOU HAVE A LABOR MARKET, JUST NOT ENOUGH PEOPLE. YOU WILL START TO SEE THESE NUMBERS DECLINE BUT THE UNEMPLOYMENT RATE WILL CONTINUE TO DECLINE. IT IS A WHITE-HOT LABOR MARKET. THERE IS NO WAY TO DESCRIBE IT. JONATHAN: IS THIS AS GOOD AS IT GETS AND WHERE DOES IT LEAVE THE FED? RICK: I THINK IT IS AS GOOD AS IT GETS FROM A LABOR PERSPECTIVE . I THINK THE ECONOMY IS
MODERATING. YOU LOOK AT THE SALES NUMBERS GLOBALLY, YOU ARE STARTING TO SEE SOME OF THE DATA,. IF YOU LOOK AT THE HOUSING MARKET, IF ANYTHING WERE TO SUGGEST STAGFLATION IT WOULD BE THE HOUSING MARKET. I THINK THE ECONOMY, AND THIS IS WHY THE FED IS IN THE TOUGHEST POSITION I'VE EVER SEEN THEM COME IS THE ECONOMY IS STARTING TO MODERATE. IF YOU CANNOT FIND THE LABOR AND YOUR WAGE COSTS AND YOUR INPUT COSTS ARE GOING UP THEN COMPANIES WILL START TO PAIR BACK BECAUSE YOU'RE SEEING THE CONSUMER BACK OFF OF THESE LEVELS. THIS IS WHY THINK THE FED HAS A TOUGH JOB.
THAT IS PART OF WHY THINK IT MAKES SENSE TO GET 50'S IN WHEN YOU HAVE AN ECONOMY THAT IS MODERATING I THINK YOU WILL DO THAT IN THE NEXT COUPLE OF MEETING. JONATHAN: I HEAR SOME 50'S. DOES THAT MEAN TWO? RICK: I THINK YOU'RE ASSUMING A LOT TO SAY YOU GO PAST TWO. THEY ARE STILL IN SUPER EASY
ACCOMMODATIVE POSITION AND YOU HAVE TO ASSUME THAT BY THE JUNE MEETING YOU HAVE GOTTEN 100 BASIS POINTS DONE. I DO NOT THINK THEY WILL DO AN INJURE MEETING. IT IS NOT IMPOSSIBLE. I WOULD ARGUE GET OFF OF THIS EASING. THE LAST SHOW WE WERE TALKING ABOUT QE WAS ENDING. YOU HAVE TO GET OFF OF THE ZERO
OR CLOSE TO ZERO. THEN AS WE GET INTO THE SUMMER, I THINK YOU HAVE TO STEP BACK AND LOOK AT WHAT THE DATA IS DOING. IF ANYBODY CAN TELL YOU THEY KNOW WHAT IS GOING TO HAPPEN WITH THE UKRAINE SITUATION, WITH THE CHINESE SITUATION, THESE HIGH PRICES WHICH TEND TO CURE HIGH PRICES AS CONSUMERS PULLBACK, I THINK IT IS PRESUMPTUOUS. JONATHAN: WOULD YOU FATE ANY OF THE MOVES IN THIS BOND MARKET. WE HAVE ADDED SOME WEIGHT AND BIG TIME. RICK: NO. THE ONLY THING I WOULD DO, PEOPLE TEND TO FOCUS ON THE FLATTENING OF THE CURVE IN THE SHORT END RATES HAVE MOVED HIGHER. WE HAVE BEEN INVESTING IN THE
ONE FOR THREE PART OF THE INVESTMENT-GRADE CREDIT MARKET. IF YOU LOOK AT RETURNS AND FIXED INCOME -- THINGS LIKE LONG CORPORATES ARE DOWN DOUBLE DIGITS. LONG TREASURIES DOWN DOUBLE DIGITS. YOU HAVE TO KEEP YOUR INTEREST
RATE EXPOSURE DOWN STEP EVEN THOUGH THE CURVE IS FLATTENING THERE THE CONCEPT OF I WANT TO KEEP MY RETURN. IF I CAN CARRY WELL THE SHORT END OF THE AGGREGATE INDEX IS DOWN 2.5% THIS YEAR, DOWN 2.5% IS BETTER THAN EVERYTHING ELSE DOWN 6% TO 12%. THAT IS PART OF WHERE WE ARE
HIDING. GET YIELDS, GET KERRY IN THE PORTFOLIO, AND DO NOT TAKE TOO MUCH INTEREST RATE. THE NEXT THREE MONTHS WE WILL GET CPI PRINTS THAT WILL SHOW YOUR AND YOUR CPI -- THAT WILL NOT GIVE ANY COMFORT ON A 10 YEAR TREASURY AT 2.40%. WHAT ABOUT -- JONATHAN: WHAT ABOUT YOUR CREDIT EXPOSURE? RICK: FOR THE FIRST TIME IN A NUMBER OF MONTHS WE HAVE STARTED TO ADD A LITTLE BIT. WHEN YOU GET HIGH YIELDS BACK
AT 6%, AND WE LIKE LOANS QUITE A BIT. NOW WHEN YOU GET HIGH-YIELD BACK AT 6%, IT IS PRETTY INTERESTING. I THINK THE BEST VALUATION OF THE EQUITY MARKET IS THE COMPANIES ARE OFF RELATIVE TO THE COST OF FINANCING IT IN FOR 10 YEARS EQUITIES HAVE BEEN TOO CHEAP. EQUITIES ARE NOT TOO CHEAP. RELATIVE TO WHERE THE COST OF FINANCING IS, I.E.
THE HIGH-YIELD MARKET. WE HAVE BEEN ADDING A LITTLE BIT , TRYING TO MANAGE THE INTEREST RATE EXPOSURE. WE HAVE BEEN ADDING A LITTLE BIT FOR THE FIRST TIME IN A WHILE. YOU SAY IF YOU GO TO LAST 10
YEARS AND SAY HI YIELDS INTO THE 60'S OR 70'S, THAT IS NOT A BAD PLACE TO CAPTURE SOME KERRY. JONATHAN: HELP ME UNDERSTAND WHAT THAT MEANS FOR THE CASH POSITION. HAVE YOU MAINTAINED THAT AT CONSISTENT LEVELS? YOU ROTATE THAT OUT OF EQUITY? RICK: CASH IS SORT OF MY FAVORITE ASSET TODAY AND IT CONTINUES TO BE. SOMEONE PUT OUT A REPORT THAT SAYS THIS IS THE WORST PERFORMANCE IN THE EQUITY MARKET AND THE DEBT MARKET. THIS IS BEEN NEGATIVE RETURNS ACROSS EVERYTHING. CASH IS A LOVELY ASSET IN THAT ENVIRONMENT. WE ARE STILL RUNNING A HIGH
LEVEL OF CASH. WE HAVE DRAWN IT DOWN TO YOUR POINT TO ADD INVESTMENT-GRADE, HIGH-YIELD, SOMETHING CONSCIOUS. A TINY BIT OF EM AND A COUPLE OF PLACES. THIS IS THE U.S. AND EUROPE. I THINK THE EUROPEAN CREDIT MARKETS WILL BECOME INTERESTING.
THAT BEING SAID I THINK RATES HAVE ROOM TO GO. WE ARE STILL BEING CAUTIOUS AROUND HOW MUCH WE ARE BUYING TODAY. JONATHAN: CAN WE FINISH ON EUROPE? THEY HAD A 7.5 CPI PRINT. NEVER MIND THE FEDERAL RESERVE WINDING DOWN QE. THE ECB WILL BE DOING QE
THROUGH Q3. THEY HAVE A DEPOSIT RATE OF -50 BASIS POINTS. I'M TRYING TO GET MY HEAD AROUND HOW MUCH REPRICING WE NEED TO DO IN THE FIXED INCOME UNIVERSE IF EUROPE IS ON THE PATH BACK TO ZERO ON A POLICY RATE? RICK: YOU THINK ABOUT HOW A YEARS WE WERE ON THE SHOW TOGETHER AND TALK ABOUT CAN EUROPE GET A 1% INFLATION RATE. THINK ABOUT THE NUMBER YOU JUST DESCRIBED. IT IS EXTRAORDINARY. EUROPEAN GROWTH OVER THE NEXT
TWO TO THREE YEARS. NUMBERS TODAY COULD BE ON PAR AND IF YOU LOOK AT ECONOMIST ESTIMATES, THEY SHOW FOR THE FIRST TIME I'VE EVER SEEN, EUROPEAN GROWTH FOR THE NEXT THREE YEARS ON PAR WITH THE U.S.. MY GUESS IS THERE IS SOME ASSUMPTION YOU WILL SEE FISCAL SPEND ALONGSIDE OF THAT IN IMMIGRATION AND DEFENSE AND INFRASTRUCTURE CLIMATE. EUROPE COULD GROW AND COULD GROW NICELY FOR THE NEXT COUPLE OF YEARS. YOU HAVE MORE TO GO IN EUROPE. I WOULD ARGUE FROM RATE PERSPECTIVE WE ARE OUT OF THE NEGATIVE INTEREST RATES TEAM WHICH WAS CRAZY TO START WITH. I DO THINK WE HAVE SOME WAYS TO
GO. I THINK INTEREST RATES, PARTICULARLY IN THE U.S. COME THE DEMOGRAPHIC AND THE DEMAND, WIRE RATE STILL WHERE THEY ARE? GLOBAL DEMAND FOR YIELDING ASSET INCOME IS STILL HIGH. IF YOU SAID PICK WHICH SIDE THEY ARE GOING, PROJECT LEAD EUROPE, I THINK HAVE RATES MORE TO GO -- PARTICULARLY IN EUROPE, I THINK RATES HAVE MORE TO GO. JONATHAN: I SEE THE TOTAL RETURN FUND WON THE AWARD -- I WANT TO CONGRATULATE YOU AND GIVE YOU THE OPPORTUNITY TO TALK ABOUT YOUR TEAM BECAUSE IT IS A BIG TEAM EFFORT OVER A BLACKROCK. RICK: YOUR VERY KIND TO MENTION THAT. BOB MILLER, WHO I KNOW YOU HAVE OTHER SHOW A LOT, IS AN EXTRAORDINARY DRIVER OF THAT FUND. IT IS A HUGE HONOR.
IT IS ONE THING TO PICK IT LET -- TO PICK IT RIGHT FOR A MONTH OR SO, BUT AS A TEAM IT HAS BEEN A PRETTY GOOD EFFORT. YOU'RE VERY KIND TO BRING THAT UP. I WILL SAY THAT WAS WHAT HAS HAPPENED. THERE IS NO LESS WORK IMPLIED TODAY TRYING TO FIGURE OUT THE ENVIRONMENTAL CONDITIONS TO OPERATE WITHIN THESE MARKETS. JONATHAN:. TWO ANOTHER 10 YEARS. MY BEST TO YOU AND THE TEAM. LOOKING FORWARD TO YEARS STILL
TO COME. FUTURES ARE POSITIVE BY A QUARTER OF 1%. WITH SOME MOVERS, HERE IS ABBY. ABIGAIL: A PIECE OF THE STRENGTH IS COMING FROM THE BANKS ON THE STRONG JOBS REPORT.
YIELDS PUMPING HIGHER, ESPECIALLY THE TWO YEAR YIELD. BANKS, WELLS FARGO UP MORE THAN 1%. NOT KILLING THE TECH SECTOR. AMAZON UP .4%, EVEN THOUGH RISING YIELDS: TO QUESTION VALUATIONS. -- RISING YIELDS ALL INTO QUESTION VALUATIONS. CHINA IS CONSIDERING GIVING THE U.S. FULL ACCESS TO AUDITS THAT
WOULD PROVIDE FULL TRANSPARENCY AND TAKE AWAY THE ON INVESTABLE QUESTION. MAYBE AS A BAROMETER OF RISK SENTIMENT, GAMESPOT UP 14%. PERHAPS WE WILL SEE THE INDEX FOLLOWS. JONATHAN: PRESIDENT BIDEN ORDERING A RECORD RELEASE OF U.S. OIL. PRES. BIDEN:
IT IS TIME TO DELIVER ON ENERGY INDEPENDENCE IN AMERICA ONCE AND FOR ALL AND I WILL USE EVERY TOOL AT MY DISPOSAL TO KEEP YOU FROM VLADIMIR PUTIN'S PRICE HIKE. PRES. BIDEN: TODAY I AM AUTHORIZING THE RELEASE OF ONE MILLION BARRELS PER DAY. OVER THE NEXT SIX MONTHS 180 MILLION BARRELS FROM THE STRATEGIC PETROLEUM RESERVE. THIS IS A WARTIME BRIDGE TO INCREASE OIL SUPPLY UNTIL PRODUCTION RAMPS UP LATER THIS YEAR. JONATHAN: PRESIDENT BIDEN TAPPING U.S. OIL RESERVES IN THE HOPES OF CUTTING GAS PRICES.
RUSSIA DEMANDING PAYMENTS IN RUBLES BUT VLADIMIR PUTIN EASING DISRUPTION FEARS SAYING WE WILL COMPLY WITH OBLIGATIONS UNDER ALL CONTRACTS COME INCLUDING GAS CONTRACTS. WILL CONTINUE TO PROVIDE GAS IN VOLUME. TEAM COVERAGE STARTS NOW WITH BLOOMBERG'S MARIA TADEO IN BLOOMBERG'S ANNMARIE HORDERN IN WASHINGTON. HAVE WE SETTLE THIS YET? HAS THIS BEEN SORTED OUT ON THE GAS PRICES? MARIA: YOU WANT TO SORT IT AND I WANT TO SORT IT. THIS HAS BEEN A PERENNIAL QUESTION FOR A WEEK. WE HAVE SOME IDEA WHAT THIS WILL LOOK LIKE. THE RUSSIANS THEY WILL NOT CUT
THE FLOWS IN EUROPE AND WE WILL CONTINUE TO HONOR CONTRACTS. WE KNOW THE GAS HAS NEVER BEEN IN BREACH OF CONTRACT, BUT HE SAYS WHAT IS GOING TO CHANGE IS FROM TODAY THERE WILL BE A RUBLE BANK ACCOUNT. THE IMPRESSION WE GET HIS EUROPEAN COMPANIES WILL SPEND THE MONEY IN EUROS. AND THE ONE FINANCIAL INSTITUTION THAT HAS NOT BEEN SANCTIONED WILL CREATE TWO ACCOUNTS FOR HIS CLIENTS, WANT WILL TAKE THE PAYMENTS IN EUROPE AND THE OTHER WILL MAKE THE CONVERSION INTO RUBLES. RUSSIA STILL GETS THE MONEY FROM THE GAS AND EUROPE CONTINUES TO BUY THE GAS, AND THE IMPRESSION I GET IS AS LONG AS THE BANK IS NOT SANCTIONED THAT WILL NOT BE ANYTHING THAT LOOKS LIKE AN ENERGY EMBARGO.
IT IS CLEAR THE EUROPEANS WANT TO KEEP THAT FINANCIAL LINE GOING. WE ARE SEEING A LOT OF POLITICAL GRANDSTANDING. THIS IS WHAT WILL BE DONE RESUME OF LEE BY THE RUSSIAN FEDERATION. JONATHAN: THAT IS THE SITUATION IN EUROPE. LET'S TALK ABOUT THE SITUATION IN THE UNITED STATES. WELCOME BACK. HAVE WE SETTLE THIS EFFORT BY THE PRESIDENT? HOW WELL-RECEIVED HAS IT BEEN? ANNMARIE: IT DOES SEEM DIFFERENT WHEN YOU LOOK AT WHAT IS GOING ON RIGHT NOW.
WE HAVE WTI OFF 7% WHEN THIS WAS ANNOUNCED. THE ISSUE IS, AND I KNOW YOU SPOKE TO THE SPECIAL ENVOY FOR ENERGIES OF 30, WILL THIS -- THE SPECIAL ENVOY FOR ENERGY SECURITY, WILL DRILLERS WANT TO COME BACK AND PRODUCE MORE. THE PRESIDENT WENT ASKING THEM YESTERDAY, ASKING CONGRESS TO CHARGE FEES TO FIRMS THAT HAVE UNUSED DRILLING LEASES ON FEDERAL LAND. YOU CAN SEE THE TENSION.
THIS IS A MASSIVE DRAWDOWN OF THE SPR. ONE MILLION BARRELS A DAY FOR SIX MONTHS. POTENTIALLY IS IT GOING TO BE ENOUGH? THEY SAY IT IS WARTIME EFFORT THAN DOMESTIC ENERGY PRODUCERS WILL STEP IN. JONATHAN: AMH, THANK YOU. MARIA TADEO IN BUDAPEST. JOINING US NOW IS ANASTASIA AMOROSO AND MIKE COLLINS. LORI CALVASINA SAID THIS
MORNING IT IS TIME TO EASE UP ON ENERGY. YOU AGREE? ANASTASIA: I DO NOT FULLY AGREE WITH THAT. I THINK ENERGY REMAINS ONE OF THE BETTER GEOPOLITICAL RISK HEDGES WE HAVE. IF YOU THINK ABOUT OIL PRICES, THEY HAVE ALREADY EASED UP ON SOME OF THE WORST CASE SCENARIOS.
I DO NOTE IF WE HAVE -- I DO NOT KNOW IF WE HAVE RULED OUT THE WORST CASE SCENARIOS LIKE OUTPUT FROM RUSSIA. WHAT IF THAT IS CURTAILED? THE MARKET THINGS WE WILL STILL BE RECEIVING VOLUME FROM RUSSIA. 70% TO 80% OF THE VOLUME BEING EXPORTED IS LOOKING FOR A NEW HOME LONGER-TERM. THAT IS ONE OF THE BETTER GEOPOLITICAL RISK HEDGES.
ENERGY STOCKS HAVE DONE PHENOMENALLY WELL, BUT IN THIS ENVIRONMENT WHEN OIL PRICES CONTINUE TO BE AT $100 A BARREL, THAT IS OUR EXPECTATION FOR THE REMAINDER OF THE YEAR. THE OIL COMPANIES ARE GOING TO BE MAKING SIGNIFICANT CASH FLOWS. WHEN I THINK ABOUT THE CURRENT ENERGY STOCKS HAVE DONE PHENOMENALLYENVIRONMENT, YOU WANT TO BE IN A HIGHER QUALITY STOCK, YOU WANT TO BE IN DIVIDEND PRODUCING STOP, THAT IS WHAT YOU FIND IN THE ENERGY SECTOR. JONATHAN: THAT IS THE ANSWER FROM AN EQUITY PERSPECTIVE. CAN YOU GIVE US THE CREDIT VIEW? MICHAEL: WE HAVE BEEN OVERWEIGHT THE ENERGY SECTOR, INCLUDING A LOT OF THE PIPELINES WHICH ARE CRITICAL TO MOVE THE GAS AND OIL AROUND AND NOW WE ARE EXPORTING WARREN MORE OF OUR ENERGY TO EUROPE.
-- EXPORTING MORE AND MORE OF OUR ENERGY TO EUROPE. WE ARE IN THE BEGINNING STAGE OF AN INCREASE IN CAPITAL INVESTING , AN INCREASING PRODUCTION OF ENERGY TO THE U.S.. WHAT WE HAVE SEEN IN THE OIL CURVE IS A FRONT END CONTRACT ARE COMING DOWN, THE CURVE IS MORE EVENLY BALANCED. THAT IS INCENTIVIZING OIL COMPANIES TO PRODUCE MORE. IT IS A GOOD ENVIRONMENT FOR ENERGY CREDIT INVESTORS BECAUSE IT MEANS MORE CASH FLOW FOR YEARS TO,. JONATHAN: WHERE YOU STAND ON CREDIT RISK MORE BROADLY. A LOT OF PEOPLE HAVE BEEN
COMFORTABLE WITH THAT. PAYROLLS THIS MORNING COME THE JOBS DATA LOOKS FANTASTIC. THE AMERICAN ECONOMY LOOKS RESILIENT. DO YOU FEAR THE SLOW DOWN IN THE BACK HALF? MICHAEL: ABSOLUTELY. THE ECONOMY IS RED-HOT, THE LABOR MARKET IS RED-HOT, ALL OF THOSE THINGS OCCUR RIGHT BEFORE A SLOW DOWN.
YOU GET A FLAT CURVE IN A LOW UNEMPLOYMENT RATE. THAT IS ONE OF THE BEST LEADING INDICATORS OF FUTURE SLOWDOWNS IS A LOW UNEMPLOYMENT RATE AND A HOT ECONOMY AND WE ARE THERE. WE ARE JUST AT THE TIPPING POINT WHERE WE ARE GOING TO SEEK DISINFLATION START TO GENERATE -- WHERE WE ARE GOING TO SEE DISINFLATION START TO -- WE ARE GOING TO SEE THIS INFLATION START TO GENERATE DEMAND DESTRUCTION. YOU WILL SEE MORE PROFIT WARNINGS, MORE PROFIT MARGIN WARNINGS, MORE UNCERTAINTY. JONATHAN: GOLDMAN TALKING ABOUT THE SAME THING THIS WEEK. WE HAVE MORE TIME AFTER THE OPENING BELL, BUT BRIEFLY, YOUR VIEW ON THE DATA, AND WHETHER YOU SHARE THE FEARS MIKE HAS? ANASTASIA: WE SHOULD NOT IGNORE THE DATA AND IT IS NOT JUST THE YIELD CURVE.
IT IS THE FACT THE YIELD CURVE IS NOT KEEPING UP WITH INFLATION. YOU HAVE NEGATIVE -- BEGINNING OF THE OIL MARKETS, WE ARE ALREADY SEEING A SLOWDOWN IN OIL DEMAND THIS YEAR, WHICH SEASONALLY SHOULD BE PICKING UP. I HAVE THE SAME CONCERNS ABOUT THE DATA.
I DO NOT THINK THE SLOWDOWN IS IMMINENT BUT IT SHOULD BE WATCHED. JONATHAN: ANASTASIA AMOROSO STEPPING WITH US ALONGSIDE MIKE COLLINS. UNEMPLOYMENT LOWER THAN ANTICIPATED, YEAR-OVER-YEAR WAGES LOOKING DECENT. THE MOVE ON THE BOND MARKET UP 11 BASIS POINTS. YOUR TWO YEAR 2.54. EQUITIES COMING OFF THEIR BIGGEST QUARTERLY DECLINE SINCE THE PANDEMIC.
JONATHAN: THE JOBS REPORT IN AMERICA LOOKS ROCKSOLID. EQUITIES DOING OK. HERE IS THE BOND MARKET PICTURE. YOU WILL NOTICE THE TWO YEAR YIELD TRADING ABOVE THE 10 YEAR YIELD. 2.43 VERSUS 2.42.
LET'S GET YOU TO YOUR MORNING CALLS. CITIGROUP UPGRADING WYNN RESORTS TO A BUY. YOUR SECOND CALL DOWNGRADING WALGREENS TO NEUTRAL, SEEING LITTLE UPSIDE AMID WEAKENING DEMAND. GOLDMAN DOWNGRADING DELL TO
NEUTRAL HIGHLIGHTING THE STOCKS RECENT OUTPERFORMANCE AND GROWING HEADWINDS. COMING UP, LOOKING AHEAD TO Q2 AFTER STOCKS RECORD THEIR FIRST QUARTERLY LOSS IN'S 2020. I HAD TO CHECK THAT A FEW TIMES. THE FIRST QUARTERLY RESULT GOING ALL THE WAY BACK TO THE PANDEMIC. YOUR OPENING BELL IS JUST AROUND THE CORNER. JONATHAN: LEAVING BEHIND A QUARTERLY LOSS THIS MORNING WITH A MONTHLY GAIN RIGHT AT THE END OF THE FIRST QUARTER. TAKING OFF Q2 WITH FUTURES UP
ON THE S&P. OFF THE BACK OF A DECENT PAYROLLS REPORT. HERE IS THE OPENING BELL. YIELDS ARE MUCH HIGHER ON THE 10 YEAR BY 10 BASIS POINTS. ON A TWO YEAR BY LITTLE BIT MORE IN THE CURVE INVERSION THROUGH MUCH OF THIS MORNING FOLLOWING THE PAYROLLS REPORT.
IN THE FX MARKET THE DOLLAR IS STRONGER, THE EURO WEAKER. CRUDE LOWER AGAIN. A 99 HANDLE, 9917. THAT IS SOME OF THE CROSS ASSET
PRICE ACTION. 20 SECONDS INTO THE SESSION, LET'S GET YOU SOME MOVERS. ABIGAIL: LET'S START OUT WITH THE BOND STORY. YIELDS SOARING. RIGHT NOW WE HAVE THE LIKES OF BANK OF AMERICA UP MORE THAN 1%. WELLS FARGO TOO. THE BANKS ENJOYING THE FACT
THAT YIELDS ARE HIGHER STOP NOT HITTING TECH. THE VIDEO HOLDING UP .3%. CHINA IS CONSIDERING GIVING THE U.S. FOR ACTIONS TO AUDITS THAT WOULD CREATE MORE TRANSPARENCY INTO THOSE COMPANIES, AND GAMESTOP UP 11%. IT IS NOT JUST THE RISK ON MOOD.
IT IS THE FACT THEY ARE PROPOSING THEIR FIRST STOCK SPLIT IN MORE THAN 15 YEARS. JONATHAN: LOOKING AT THE BOND MARKET MOVE UP 11 BASIS POINTS THE TWO YEAR TO 2.44, ON THE 10 UP 11 BASIS POINTS. THE TWO GEAR UP A LITTLE BIT MORE. A LITTLE BIT OF CURVE INVERSION. LET'S CALL IT ZERO SO I STOP WASTING MY TIME GOING OVER THIS AGAIN AND AGAIN AS WE JUMP BACK AND FORTH AND LOOK AHEAD TO Q2. OFF THE BACK OF THE FIRST QUARTERLY DECLINE IN'S THE ONSET OF THE PANDEMIC, IT HAS BEEN TWO YEARS. LOOKING AT THIS IS KAILEY LEINZ.
KAILEY: THE QUARTERLY DECLINE FOR THE S&P WAS 5%. THE GOOD NEWS IS IT COULD HAVE BEEN WORSE BECAUSE THAT WAS WELL OFF THE LOWS WE SAW. TREASURIES SAW THEIR WORST QUARTER ON RECORD BY A .6% DECLINE IN FOR INVESTMENT CREDIT THEY WERE DOWN 7.8%. WHEN YOU PUT ALL OF THOSE CATEGORIES TOGETHER IT WAS THE WORST RETURN SINCE 1980. I LEFT ONE THING OUT, COMMODITIES. THAT WAS THE BEST PLACE TO HAVE
YOUR MONEY. 23% FOR THE METALS AND WHEN YOU COMBINE OIL AND GAS, BROADER ENERGY UP 47%. THAT IS THE BACKWARDS LOOK. WHEN IT COMES TO THE FORWARD LOOK, I WILL FOCUS ON EQUITIES AND LOOK AT HISTORY.
THIS WAS THE NICE TIME TO SEE THAT THE S&P OPENED THE YEAR WITH THE FIRST QUARTER LOSS. OF THE PRIOR EIGHT YEARS, SIX OF THEM SOUGHT RALLIES IN THE SECOND QUARTER, GETTING MORE THAN 5%. THE CAVEAT IS FOUR OF THOSE YEARS, THE INDEX STILL ENDED DOWN ON THE YEAR. IMPORTANT STATS. BACK WITH US ARE IN A STACIA AMOROSO AND MIKE COLLINS.
-- BACK WITH US ARE ANASTASIA AMOROSO AND MIKE COLLINS. "THERE'LL BE A NUMBER OF NEGATIVE RETURN SURPRISES. YOU'LL PROBABLY GET A LOT OF ANNOUNCEMENTS BEFORE THE EARNINGS SEASON." ANYWAY IN ON WHERE YOU THINK SOME OF THIS WILL BE CONCENTRATED? MICHAEL: IS A FUNCTION OF THE FACT SOMETHING HAS TO GIVE. EITHER PRICES HAVE TO COME DOWN FOR DEMAND HAS TO COME DOWN OR BOTH. I WOULD GUESS BY THE END OF THE
YEAR BOTH ARE COMING DOWN. COMPANIES ARE JUST GETTING TO THIS INFLECTION POINT WHERE THEY WILL HAVE DIFFICULTY CONTINUING TO PASS THROUGH THESE HIGHER INPUT COSTS. THEY STOP PRODUCING STUFF OR THEY EAT IT IN TERMS OF PROFIT MARGINS. I THINK IT WILL BE WIDESPREAD, BUT IT IS THE CONSUMER DISCRETIONARY SIDE. PEOPLE ARE SPENDING ALL OF THEIR MONEY ON OIL AND GAS AND CARS AND WHO. THEY ARE NOT GOING TO BE -- AND FOOD. THEY ARE NOT GOING TO BE ABLE
TO SPEND MONEY ON DISCRETIONARY ITEMS. I THINK THERE'LL BE PUSHBACK FROM CONSUMERS. JONATHAN: ANASTASIA, ARE YOU EXPECTING THE SAME PUSHBACK? ANASTASIA: I AM. ONE OF THE SURVEYS THAT TELLS
YOU WHAT SMALL BUSINESSES ARE DOING, THEY ARE STILL RAISING PRICES TODAY BUT IN THE NEXT THREE MONTHS THEY ARE NOT EXPECTED TO RAISE PRICES AS THEY HAVE BEFORE. IT IS BETWEEN SLOWING WAGE GROWTH TO THE CONSUMER AND INFLATION THAT IS STARTING TO BITE AND THE COMPANIES THAT ARE NOT ABLE TO RAISE THOSE PRICES AS THEY HAVE DONE BEFORE. THAT IS GOING TO REDUCE THE MARGIN SQUEEZE FOR CONSUMER STAPLES AND CONSUMER DISCRETIONARY COMPANIES. I ALSO AGREE WITH MIKE THAT WILL BE IN THIS PERIOD WHERE WE WILL SEE SLOWER ECONOMIC GROWTH, WE WILL SEE FIT RATE HIKES AND THIS WILL LEAD TO AN EARNINGS DOWNGRADE CYCLE. WE HAVE ALREADY SEEN THIS IF YOU LOOK AT GLOBAL EARNINGS REVISIONS RATIO, IT IS NEGATIVE. THAT DOES NOT FLIP BACKGROUND VERY QUICKLY. IT USUALLY LASTS FOR A PERIOD
OF TIME. THAT WILL BE THE STORY FOR THE REST OF THE YEAR. I WILL COME BACK TO Q2 SPECIFICALLY AND I SHARE THE SENTIMENT WE ARE IN FOR A BETTER Q2 AND WE HAVE SEEN IN Q1 BECAUSE WE WILL SEE SOME THE REVERSALS OF THE TREND FROM Q1, BUT ON EARNINGS IN PARTICULAR MIGHT IS RIGHT, WE HAVE SEEN A GREAT NUMBER OF NEGATIVE EARNINGS PER ANNOUNCEMENT. THE GREATEST NUMBER HAS BEEN
THE FOURTH QUARTER BEFORE THE PANDEMIC. WITH THAT, MAYBE FOR THIS PARTICULAR QUARTER, A LOT OF THE NEGATIVITY IS STARTING TO BE PRICED IN AND WE ARE ENTERING A SEASONALLY STRONG PERIOD FOR THE MARKET. I PROBABLY WOULD NOT FATE THIS RALLY JUST YET. JONATHAN:
WHAT WOULD YOU DO WITH THE INDEX LEVEL. THIS IS THE FIRST TIME WHERE YOU DO NOT SOUND AS CONSTRUCTIVE ON THE STORY X ENERGY. WHAT WOULD YOU DO WITH THE INDEX STORY. ANASTASIA: IF YOU TAKE A STEP BACK AND LOOK AT WHAT THE S&P HAS DONE BEFORE THE PANDEMIC. THIS HAS BEEN A STRONG REBOUND IN THE MARKET. IF YOU LOOK AT ALL OF THE HEADWINDS, I'M NOT SAYING THERE IMMINENT, BUT I THINK WE ARE IN THIS ENVIRONMENT WHERE IT IS NOT EASY.
YOU DO NOT HAVE AN EASY FED TO PROPEL THE MARKETS AND WE HAVE TO CONTEND WITH THE SLOW DOWN. I THINK WE ARE GOING TO BE IN AN ENVIRONMENT WHERE WE WILL HAVE THESE PERIODIC GROWTH SCARES. I THINK IT IS TOO EARLY TO LEAVE THE MARKET PARTY BECAUSE I DO NOT THINK THE MARKETS PEAK UNTIL AFTER THE YIELD CURVE INVERSION, SO YOU WANT TO STAY IN THE TRAY BUT YOU PROBABLY WANT TO DE-RISK IT.
MAYBE THAT IS WHERE YOU GIVE SOME UPSIDE AND GIVE PROTECTION ON THE DOWNSIDE. THAT IS ONE WAY TO THINK ABOUT MODERATING YOUR RISK ON EXPOSURE. ON THE INDEX LEVEL I WOULD STICK WITH THE ENERGY TRADE.
I DO LIKE THE TECH TRADE. A LOT OF PEOPLE FLEE THAT BECAUSE THE FED IS RAISING RATES. WHEN WE ARE GOING TO DO GROWTH SLOWED DOWN, YOU WANT THINGS THAT HAVE THE HIGHEST MARGINS IN THE STICKIEST MARGINS AND THAT IS THE TECH SECTOR AND SOFTWARE IN PARTICULAR. YOU BARBELL THAT WITH THE HIGHER DIVIDEND PAYERS. RICK RIEDER LIKES CASH. THERE IS A PLACE FOR THAT IN
THE PORTFOLIO. RICK ALSO MADE A GOOD POINT. WITH RATES RISING IN CREDIT SPREADS WIDENING THAT DOES CHANGE THE DYNAMIC WHAT INVESTORS ARE WANTING TO DO. SOME VALUE STARTING TO EMERGE IN THE BOND MARKET. JONATHAN: I WONDER WHETHER REAL RATES WILL BE A SUPPORTING FACTOR IN THE YIELDS TO COME. B"NEGATIVE U.S. REAL YIELDS SHOULD POP UP GLOBAL VALUATIONS DESPITE INTENSE OF CLINICAL CONFLICT, GPA CUTS, RUNAWAY INFLATION, POSITIVE REAL RATES POTENTIALLY COMING INTO 2023 WOULD MAKE US LESS INCLINED TO BUY THE DIPS." THE REAL RATE STORY DOES NOT CHANGE FOR HIM UNTIL 2023. WHAT WILL HAPPEN FOR REAL RATES
THIS YEAR? MICHAEL: I THINK THEY BASICALLY STATE NEGATIVE FOR THE REST OF OUR LIVES. -0% TO 1% REAL RATE IS NORMAL IN A WORLD OF TREMENDOUS DEMAND, TREMENDOUS EXCESS SAVINGS, TREMENDOUS DEMAND FOR YIELD, AGING POPULATIONS. YOU'RE SUPPOSED TO PAY TO STORE YOUR MONEY IN SHORT-TERM RISK-FREE ASSETS. ONE THING THAT COULD HAPPEN IS THE FED PUT OVER HIKE, WHICH IS VERY LIKELY, AND PROBABLY OUR BASE CASE, AS INFLATION IS FALLING. MAYBE GET A SHORT PERIOD OF
POSITIVE REAL RATES. I THINK THE FED WILL HAVE TO CHASE THEIR TAIL. JONATHAN: WALK ME THROUGH THIS. AS THIS PROGRAM IS PLAYING OUT YOU'RE WATCHING THE PRICES AND BONDS DOWN, ARE YOU ITCHING TO GET BACK TO THE DESK IN BY THEM? MICHAEL: WE WERE NEGATIVE ONTO DURATION EARLY THIS YEAR WHEN WE SAW SOME OF THESE BRUTALLY BROUGHT CPI PRINTS AND A HAWKISH TILT TO THE FED. IN THE LAST WEEK OR SO WE COVERED THAT HAVE GOT MORE FLAT DURATION. WHAT PEOPLE DO NOT REALIZE,
WHEN THE CURB IS REALLY FLAT, WHAT WITH THE AVERAGE INVESTOR WANT TO DO IS MOVE INTO THE FRONT END OF THE CURVE, GOING TO CASH OR TWO YEARS BECAUSE THEY THINK I'M GETTING THE SAME GUILT, WHY WOULD I TAKE MORE RISKS -- THE SAME YIELD, WHY WOULD I TAKE MORE RISKS? THE ACTUAL THING TO DO IS MOVE OUT ON THE CURVE AND DURATION BECAUSE THAT FLAT CURVE WILL RESULT IN A STEEPER CURVE AND YOU WILL GET PAID IN CURVE AND BETWEEN THREE AND FOUR AND FIVE YEARS I THINK THE FUNDS RATE WILL BE COMING DOWN AND LONG RATES WILL BE LOWER THAN THEY ARE TODAY. THERE IS A LOT OF EMBEDDED VALUE. JONATHAN: EVERY TIME WE GET A SELLOFF LIKE THIS ONE, IT INTRODUCES THE CONVERSATION WHETHER THE DOWNTREND IN TREASURY YIELDS IS OVER. WHAT IS THE ULTIMATE PUSHBACK TO THAT FROM YOU? MICHAEL: WE ARE AT THE TOP. I'VE BEEN FOLLOWING THIS TREND FOR MY ENTIRE THREE DECADE CAREER WE'VE ALWAYS STAYED WITHIN THAT BAND. RIGHT NOW WE ARE AT THE TOP OF THAT BAND AND WE ARE SEEING A LOT OF PENSION FUNDS LOOKING AT THE BOND YIELDS, LIKE ANASTASIA TALKED ABOUT RELATIVE TO THE RETURN ON STOCKS AND SAYING THIS IS A GOOD TIME TO REBALANCE, TO SELL EQUITIES IN GOING TO BONDS AT MUCH HIGHER YIELDS AND MUCH HIGHER EXPECTED RETURNS. WE DID NOT SEE A LOT OF
INTERNATIONAL DEMAND. THERE IS A LOT OF PUSHBACK AS PEOPLE GET OLDER, THEY NEED TO REBALANCE AND OF MORE FIXED INCOME. JONATHAN: I WILL COME BACK TO THIS CONVERSATION. ANASTASIA AMOROSO AND MIKE COLLINS DIPPING WITH US.
EQUITIES ON THE S&P 500 SHAPING UP, A LITTLE BIT POSITIVE. COMING UP, THE WAR IN UKRAINE JEOPARDIZING THE ECONOMIC RECOVERY. >> I BELIEVE WE ARE UNDERESTIMATING THE MEDIUM-TERM IMPACTS OF THIS WAR. JONATHAN: THAT IS COMING UP, PLUS WE WILL
CATCH UP WITH THE WHITE HOUSE. U.S. LABOR SECRETARY MARTY WALSH ON THE PAYROLLS REPORT. INTERVIEW WITH THE NETHERLANDS CENTRAL BANK GOVERNOR AT 10:30 IN NEW YORK, 3:30 IN LONDON. THIS IS BLOOMBERG.
>> MOST COMPANIES HAVE SAID THEY BELIEVE WHAT WE DID YESTERDAY WAS EXACTLY THE RIGHT THING TO DO AND THEY FEEL IT HAS AN INCENTIVE BECAUSE IT IS SIX MONTHS BEFORE THEIR PRODUCTION COMES ONLINE AND BECAUSE WE WILL SPEND THE NEXT COUPLE OF YEARS REPLENISHING THE RESERVE, THAT MEANS THEY ARE INCENTIVIZED TO CONTINUE TO SPEND THE THEY WERE ANNOUNCED TO INCREASE PRODUCTION. JONATHAN: JOINING US A FEW HOURS AGO ON THE CRUDE SITUATION. AMH JOINS US IN D.C.. A LOT OF PUSHBACK. SOME PEOPLE OF THE OIL PATCH ARE HAPPY. STRONG WORDS FROM THE PRESIDENT. "COMPANIES HAVE AN OBLIGATION
THAT GOES BEYOND THE SHAREHOLDERS TO THEIR CUSTOMERS, THEIR COMMUNITY, THEIR COMPANY. NO AMERICAN COMPANY SHOULD TAKE ADVANTAGE OF A PANDEMIC OR OF VLADIMIR PUTIN TO ENRICH THEMSELVES AT THE EXPENSE OF AMERICAN FAMILIES." STRONG STUFF. ANNMARIE: THINGS TO NOTE. IT IS A COMPLETE 180 THE ADMINISTRATION.
THIS IS A PRESIDENT WHO CAMPAIGNED TO MAKE CLIMATE OF PIVOTAL SECTOR OF HIS ENTIRE CAMPAIGN. IN THE SECOND HALF YOU HAVE A WAR THAT IS GOING ON IN RUSSIA IS SUCH A MASSIVE PRODUCER. THE ISSUE THIS ADMINISTRATION HAS IS IT IS TOO SHORT UNTIL WE GET TO NOVEMBER AT THOSE GASOLINE PRICES ARE GOING TO HIT HARD. CONSUMERS AT THE PUMP. IT IS NOT JUST FARM TO TABLE,
IT IS FARM TO TRUCK TO TABLE. THE OIL PRICES INCREASES EVERYTHING ALONG THE HIGH CHAIN THAT IS HURTING CONSUMERS. JONATHAN: ONE CONVERSATION WE HAD, THIS TALKING POINT OF THE ADMINISTRATION, AND IT IS THAT, TALKING POINT, THE AMOUNT OF LEASES SOME OF THESE OIL COMPANIES ARE SITTING ON. THE WAY IT IS FRAMED AS IF THEY ARE SITTING ON A PRODUCTIVE LAND WITH A VERY CHEAP OIL THEY CAN GET A HOLD OF AND SELL INTO THE MARKET.
IT IS NOT THAT SIMPLE AT ALL. WHY DO THEY KEEP BRINGING THIS UP? ANNMARIE: NOT SIMPLE. HE WAS FAIR ABOUT THAT THAT. HE SAID NOT ALL OF THE TIME YOU WILL HAVE A PRODUCTIVE WELL AND YOU HAVE TO DO A LOT OF DIGGING IN GEOLOGY AND TESTING TO MAKE SURE THERE IS PROFITABLE OIL IN THE WELLS TO USE THEM. ON THE OTHERS THE
ADMINISTRATION THINKS IF YOU'RE JUST HOLDING ONTO THESE LEASES NOT USING THEM YOU SHOULD HAVE TO PAY A FEE. WHY SIT ON THAT? USE IT OR LOSE IT. THIS MIGHT ACTUALLY GET SOME STEAM AND CONGRESS. IT IS A TALKING POINT FOR THE
ADMINISTRATION BECAUSE 9000 SOUNDS LIKE A LOT. THE ISSUE IS UNTIL YOU FIND OUT HOW MUCH OIL ARE IN THOSE WELLS, IT WILL BE MUCH LESS. JONATHAN: THANK YOU. AMH. IT IS A NUANCED DEBATE AND I HOPE TO ADD MORE VALUE TO IT IN THE COMING WEEKS AND MONTHS. BREAKING DATA JUST CROSSING THE
WIRES. MICHAEL MCKEE BREAKING THROUGH ALL OF IT IN D.C. PUT IT TOGETHER FOR US. MICHAEL: WE HAVE BEEN TALKING ABOUT THE FACT MARCH WAS THE MONTH WHEN THE WAR STARTED AND WE ARE SEEING SOME RESULTS. IN THE UNITED STATES, BETTER MANUFACTURE NEWS FROM THE S&P GLOBAL. PMI NUMBERS, 58.8.
THAT IS THE FINAL NUMBER. THE PRELIMINARY WAS 58.5. NOT THE SAME IN EUROPE. THE PMI'S THERE WENT DOWN ACROSS THE BOARD AS THE MONTH WENT ON AND THE WAR STARTED RAGING. THE BIG PROBLEM FOR THE EUROPEANS IS INFLATION. THE EUROPEAN CPI COMES IN AT 7.5%.
THAT IS THE HIGHEST EVER FOR THE EURO ZONE AND SOMETHING THEY WILL HAVE TO WORK ON. THE ECB HAS A TOUGH JOB AHEAD OF IT. ONE MORE THING TO NOTE IS THE CHINESE PMI BELOW 50. IT JOINS THE STATE BMIS BELOW 50 SUGGESTING CONTRACTION IN THE CHINESE ECONOMY. NOT GOOD FOR THE OVERALL GLOBAL ECONOMY. JONATHAN: MICHAEL MCKEE, I'M PLEASED TO GET THE GLOBAL VIEW.
I WANT TO GET TO MIKE COLLINS ON THIS. 7.5 CPI IN THE EURO ZONE. THEY WILL BE DOING QE THROUGH Q3 . WHAT CHANGES FOR YOU IN EUROPE? JULIE: THERE GDP -- MICHAEL: THE GDP IS SLOWING MORE QUICKLY THAN OURS. THE ECB WILL TIP THEIR HAND AND INDICATE THEY WILL FOCUS MORE ON THE GROWTH SIDE OF THE NATION THAN THE INFLATION SIDE. I WOULD NOT BE SURPRISED IF THE
FED IS IN THE SAME BOAT. AT THE END OF THE YEAR OF INFLATION IS STILL RUNNING AT 7% IN GROWTH IS TILTING DOWN TOWARDS 1%, WHAT DOES THE FED DO? THEY PROBABLY START FOCUSING MORE ON THE GROWTH STORY AND PROVIDE SUPPORT. RIGHT NOW, THEY ARE SINGLY FOCUSED ON INFLATION AND THEY WILL RUN HOT AND THEY WILL KEEP TIGHTENING. THERE IS A CHANCE THEY DO 100 BASIS POINTS IN MAY AND JUNE. WHY STOP AT 50? IF YOU STOP AT 50, BY THE END OF JULY WHEN YOUR THIRD MEETING COMES UP YOU ARE AVERAGING HALF A POINT OF FED FUNDS RATE FOR ALMOST FOUR MONTHS BETWEEN NOW AND THEN. WHY NOT GET THERE SOONER?
JONATHAN: YOU DO NOT GET TO SAY THAT AND WALK AWAY. YOU THINK THEY SHOULD GO MORE THAN 50? THERE IS A SHOULD CALL AND THEY WILL CALL. MICHAEL: THEY COULD. MAY 4 IS A LONG TIME AWAY. THEY HAVE PLENTY OF TIME TO SET UP THE MARKETS FOR MORE AGGRESSIVE HIKES. THEIR THIRD MEETING THIS YEAR
FROM NOW IS NOT FOR FOUR MONTHS. 50 AND 50, THEY ARE SITTING HERE AT HALF A PERCENT ON AVERAGE. IS THAT REALLY WANT TO BE? YOU SAW JEFF ROSENBERG SAY THE FED WANTS TO GET AHEAD OF THIS. THAT IS NOT CUTTING AHEAD OF IT. WE ARE IN FRONT OF THE CURVE. I THINK THEY WILL RATCHET UP
THE FRIENDS -- THE FUNDS RATE AGGRESSIVELY. JONATHAN: EVERY SHADE THAT. MY COLLINS, IT IS SPECIAL THANKS -- MIKE COLLINS, AND A SPECIAL THANKS TO ANASTASIA AMOROSO. A SOLID JOBS REPORT BEHIND US IN THE UNITED STATES AND YIELDS HIGHER BY 11 BASIS POINTS. ON THE TENURE ALSO AT 2.44, ALSO UP 10 BASIS POINTS. JOINING US IS U.S. LABOR SECRETARY MARTY WALSH.
SECRETARY WALSH, WHAT A JOBS REPORT. FANTASTIC. MOST PEOPLE WHO HAVE COME ON THE PROGRAM ON BLOOMBERG SURVEILLANCE AND ON THE OPEN HAVE ALL SAID IT LOOKS GREAT. WHAT ARE YOU MOST ENTHUSED BY LOOKING AT THIS? SEC. WALSH: ONE OF THE THINGS I LIKE HIS WE SAW AN INCREASE IN LABOR PARTICIPATION RATES. THE UNEMPLOYMENT NUMBER LOW, A LAST THREE-MONTH REPORT, A LAST 11 MONTH REPORT, OVER 450,000 JOBS. WHEN YOU THINK ABOUT MOVING FORWARD INTO 2022, 1.6 MILLION
PEOPLE NEED TO RETURN TO THE WORKFORCE. HOW DO WE GET THOSE FOLKS BACK TO WORK AND MAKE SURE LABOR PARTICIPATION GOES UP. THAT IS ONE OF THE THINGS. I'M NOT TAKING AWAY FROM THE REPORT. VERY EXCITED ABOUT THE REPORT. WE ARE THINKING ABOUT HOW TO MOVE FORWARD. WE THINKING ABOUT WHAT COULD BE DONE BY CONGRESS. WE HAVE THE BIPARTISAN
INNOVATION ACT. THAT ALLOWS SUPPLY CHAIN ISSUES GOING FORWARD. WE HAVE COVID RELIEF MONEY BEING TALKED ABOUT UP AT CAPITOL HILL. THEY NEED TO PASS THAT BECAUSE I AM SEEING WHAT IS GOING ON IN CHINA AND PARTS OF EUROPE WITH ANOTHER VARIANT. WE NEED TO MAKE SURE WE ARE PREPARED FOR THAT IN THE UNITED STATES, AND THEN INFLATION. THE PRESIDENT IS LASER FOCUSED ON KEEPING THE COST DOWN. LOTS OF CHALLENGES.
GLOBAL CHALLENGES. WE HAVE TO CONTINUE TO WORK CLOSELY ON THAT. THE FEDERAL RESERVE WILL TAKE THEIR ACTION. I CANNOT COMMENT ON THAT. WE HAVE TO MAKE SURE IN THE SHORT TERM WE DO EVERYTHING WE CAN TO REDUCE THOSE PRICES BUT ALSO LONG-TERM THIS DOES NOT HAPPEN AGAIN. A LOT OF WHAT WE ARE SEEING WITH THE PANDEMIC, WHAT WE ARE SEEING WITH VLADIMIR PUTIN AND UKRAINE, BUT WE ALSO HAVE TO THINK LONG TERM, HOW DO WE PREPARE THE COUNTRY SO WE DO NOT GO THROUGH THIS AGAIN. JONATHAN: I HAVE OTHER QUESTIONS.
I WILL GO THROUGH OTHER ISSUES. THERE IS LABOR CONTRACT INCLUDING ABOUT 22,000 DOCKWORKERS INCLUDING LONG BEACH PORT. WHAT IS THE DIFFERENCE BETWEEN THOSE INDIVIDUALS BEHIND THOSE GROUPS THAT REPRESENT THEM. YOU THINK THERE LEVERAGED FOR BETTER TERMS AND EXPLOITING THE COUNTRY'S DEPENDENCE ON THOSE PORTS? WHAT IS THE DIFFERENCE? SEC. WALSH: I DO NOT THINK THEY WILL DO
THAT. I WAS IN SEATTLE AND TACOMA TO TALK TO THE COMPANIES ABOUT THE NEGOTIATION A LITTLE BIT, ABOUT HOW THEY FEEL ABOUT IT, AND THE UNIONS, AND EXPRESS TO BOTH SIDES THE IMPORTANCE OF WHAT WE HAVE GONE THROUGH AS A NATION OVER THE LAST 18 MONTHS WITH SUPPLY CHAIN CHALLENGES AND STILL HAVING SHIPS IN THE OCEAN. THEY UNDERSTAND THE IMPORTANCE OF THAT. I DO NOT SEE EITHER SIDE
EXPLOITING THE SITUATIONAL LIVING FOR BETTER WAGES. THE CONTRACT WILL BEGIN NEGOTIATIONS AT SOME POINT. THEY ARE TO DO SOME NOTIFICATION FEES.
I WILL MONITOR THE SITUATION CLOSELY. I WANT TO BE SURE WE DO NOT STOP OUR PORTS. THAT IS LAST THING WE NEED IN THIS COUNTRY OR THIS WORLD IS SHUTTING DOWN OTHER SUPPLY CHAINS AND CREATING ISSUES. SEC. WALSH: ARE YOU -- JONATHAN:ARE YOU GOING TO STEP IN? SEC. WALSH: I DO NOT THINK I NEED TO STEP
IN AT THIS POINT. IF I DID I WOULD HAVE A DIFFERENT CONVERSATION WITH YOU. I FEEL GOOD ABOUT WHERE THE CONVERSATION IS WITH THESE GUYS. THEY UNDERSTAND THE MAGNITUDE OF THIS MOMENT. THIS IS UNLIKE ANY MOMENT THEY
HAVE HAD. COMING OUT OF A PANDEMIC AND MOVING FORWARD, I THINK THEY KNOWLEDGE SERIOUSLY THE SITUATION IN THIS COUNTRY AND HONESTLY THE SUPPLY CHAIN. MICHAEL: -- JONATHAN: YOU'VE BEEN TO THOSE PORTS AND TRAVEL A LOT. YOU ALSO BEEN CRITICIZED BECAUSE YOU SPENT 162 DAYS IN BOSTON OUT OF YOUR FIRST 284 DAYS IN OFFICE. SECRETARY WALSH, THIS COMES UP OFTEN WHEN YOU AND I TALKED. IT KEEPS COMING UP. WHY IS THAT?
SEC. WALSH: I THINK IT IS A RIDICULOUS ARGUMENT AND RIDICULOUS POINT THAT IS BEING MADE. IN THE BEGINNING OF ME BEING SECRETARY OF LABOR, AND THE DEPARTMENT OF LABOR, NOBODY WAS IN THE OFFICE. WE WERE SHUT DOWN BECAUSE OF COVID-19.
I WAS DOING MY JOB TRAVELING AROUND THE COUNTRY. I GO HOME EVERY WEEKEND TO BOSTON. I WILL CONTINUE TO GO HOME TO BOSTON BECAUSE I HAVE A MOTHER THERE AND A FAMILY THAT IS THERE. WHEN THAT ARTICLE WAS WRITTEN IN THAT REPORTER PUT THOSE FACTS IN, SHE IS INCORPORATING WEEKENDS.
IF SHE TOOK THOSE OUT AND DID AN ACCURATE ACCOUNT OF WHAT HAPPENED IT WOULD TELL A DIFFERENT STORY. JONATHAN: I'VE A MOTHER IN LONDON, I HAVE TO BE IN NEW YORK. PEOPLE ARE ASKING WHY YOU'VE NOT CHOSEN TO LIVE IN WASHINGTON, D.C. SEC. WALSH: I DO LIVE IN WASHINGTON. JONATHAN: YOU HAVE A PERMANENT RESIDENCE? SEC. WALSH: I AM LIVING OUT OF A HOTEL.
JONATHAN: THANK YOU FOR BEING WITH US IS ALWAYS. WITH YOUR EQUITY MARKET DOING OK. THAT CONVERSATION KEEPS COMING UP WITH SECRETARY WALSH AND HE IS VERY -- RESPONDING TO IT. THIS IS THE COUNTDOWN TO THE OPEN. THIS IS BLOOMBERG.
2022-04-05 11:33
