tv Whatd You Miss Bloomberg October 2, 2015 5:30pm-6:01pm EDT
alix: we are moments away fromalix: the closing bell. i am alix steel. joe: i'm joe weisenthal. alix: u.s. stocks rebounding from disappointing slumps. alix: the question it -- joe: the question is, "what'd you miss?" debating the jobs report. was it a miss, or just what the market needed? alix: the panic index. we have not reached these panic level since 2012. we have the charts that show
what panic and euphoria mean for the markets. strategisteak to the behind the controversial call in the biotech and pharmaceutical industry. a dowat one point you had down 200 points and now we are ending 200 points in the green joe:. we got a disappointing job report. wages were muted. down to better visions. everyone don't everything. -- dumped everythiong. the dollar came back. 10 year yield not as low as it was in the beginning. alix: in the beginning, that news is actually bad news, but now it is like, financials came off a little bit, the 10 year yield comes back a little bit, you see they are
jumping off the lows of the session. you are looking at the spread. alix: joe: -- joe: the two-year, 10 year spread was interesting. the two-year did not bounce much, but the 10-year did. i thought one possibility is the report perhaps kicks fed hike in the future but maybe does not change the overall trajectory as much as people thought. the: that echoed what market reacted to. take a look at the unemployment rate versus the own employment cost index. index thatroader janet yellen looks at. both of them are now going down. we ended up at 10% on the u6, we had 10% wage
growth. something has got to give. we have seen measures of unemployment kick up. hopefully the next move will be higher wages. leaking of underemployment and under the hood things, here is a chart which is closely related to what you are looking at. these are people working part-time for economic reasons. that is plunging. that is hitting a new low for the cycle. that is a good sign. people who are part time that would like to be other eyes. what is going on? where are these people going? are they going to full-time jobs? are they dropping out? we go to michelle meyer, deputy head of u.s. economics, and tom lead. with you make of these measures unemployment?
ichelle: the use six measures came down. the other is kind of health. that it is the case workers that have been discouraged. they have been in the part-time employment for -- well, it could be four years, and maybe they are starting to drop out of the workforce more. this could very much reverse in the coming months. economics did fall. alix: tom, what you make of the rally? we will see a rate hike at some point, but it may be pushed out. is that your take? beeni think the market has diluted with that news. we had an awful month. yes. this is the first time we had bad news and the market rallied big. it is a different inflection. alix: the action --
joe: the action shows that we have bad economic news and a strong comeback, this is when you get bullish. tom: friday, there will be a huge miss on the jobs of work, i think people would have said we would be down 5%. instead we had a bad open, the weures collapsed, and then reversed and finished the super strong. joe: i want to go back to something you said. i want to go back to my terminal. you mentioned discourage workers. have a hard time squaring in my head is this survey shows the percentage of workers who perceived jobs to be plentiful is surging. how do you reconcile with the rise of discouraged workers and
people who think jobs are plentiful? i'm putting on the spot. michelle: clients are looking at improvement. weekre you seeing these signs within the labor markets? labor force about participation back to 1997. michelle: it is when you look at the population ratio in you see the same thing. one side is a demographic story. that will pull down participation. you are seeing signs of discouraged workers. that could be skill mismatch. certain sectors have plentiful jobs. where the workers are, that is where you were not seeing as many these. perhaps it is a dislocation of the labor market.
joe: let's talk about the relation between the fed and the job market. it was recently written that the fed can never raise rates if the market discounts lower rates. the prediction is the fed will raise rates only when the market is begging for it. ing marketa begg look like? tom: i agree with the essence of that statement. i think the fed would want to have sufficient confidence to know they do not unleash unintended consequences. the second, they do not want to be in a position to reverse it. the evidence and the economic data has to be overwhelmingly good. joe: having -- alix: having this bullish reversal, we are down 200 points, we are ending in positive territory. does that indicate it would be
enough? tom: yeah. the rally was great. what bothers me is high-yield has not been act in great. it is not a real confirmation. folks will be mulling over the weekend over the dichotomy. they want confirmation. alix: it is about what the market is saying and what the data is saying. they should go hand-in-hand with one another. from the fed's perspective, they need to feel reasonably confident inflation is picking up. current inflation numbers have to look pretty decent. there are transitory factors holding back inflation that need to leave. wagehourly earning inflation is having a where the cry -- boy that cries wolf moment. everyone season around the corner. it never comes. when will it show up?
michelle: if you look at where we are in terms of unemployment relative to the unemployment rate, which should be on the verge of wage increase. i think that is why people keep saying it is going to happen. instead, we just keep revising down our forecast for nehru. metink conditions are being and your hearing a lot of and it notes. it should turn higher. are we seeing enough of a push for the wages that offset inflation from abroad? the alix: brings us to dollar. we have had a strong dollar and emerging markets slowing for a while. feeling theust now impact of the september jobs report? michelle: producing jobs week, but you are right.
these producing jobs have been falling for some time. mining sector, manufacturing. that is not new. what is new is that private services jobs were week. is that just a temporary weakness, or is there something a bit more persistent? joe: as you look forward to earning season, how does the strong dollar play into what you are seen? tom: fire apps had a great quantification this year. they looked at companies and the effect on an annualized basis is $85 billion taken out of bottom-line earnings. that is 2q. three q is even bigger. third quarter will be the biggest reader i think the be even bigger.
i think the dollar has fallen off. but i think it will come back. earnings will be a tailwind to the dollar. for gdp dragg it in terms of overall economic growth, you expect it to run by the dollar. michelle: exactly. the peak hit happened this summer. if you have some stabilization from here, it could be a bit of a plus. it could be a reversal. joe: thank you very much michelle. tom, you are staying with us. alix: is it time to press the panic button? we have the chart you can't miss. ♪
joe: "what'd you miss?" alix: we asked if it was time to press the panic button. joe: check out this chart. in the past three days, there global appetite risk reached panic level for the first time since 2012. alix: do you believe it is a good time to buy panic assets? it will be a quick bounce. you will have a fed hike instead of easing. joe: what you normally expect the reaction to be, we probably will not get that. maybe not bullish this time. alix: let's get to the top headlines. the latest computer model say hurricane joaquin will miss the east coast. the storm pounded parts of the bahamas. forecasters say a slow weakening of storm should begin tomorrow.
the coast guard is looking for a cargo ship 33 people on board. education secretary arne duncan is leaving after seven years on the job. don't get is -- duncan is one of the longest-serving obama cabinet ministers. president obama is planning to put john king junior in charge. touching alle areas of the company. walmart trimmed its annual earnings report. it marks the largest cut it headquarters since 2009, 1 800 people were let go. joe: biotech is one of the main sectors that has gotten clobbered during this bout of volatility. alix: the index has fallen more than 20% since july.
seeing a rebound. buy tom is that you should the biotech floor. you are bullish. why? care areech and health great, innovative, american sectors with growth. there have been questions about pricing, but one of the ask is howou might common is a 20% fall in a month? since 1904, it is happened 800 time. joe: for every group? tom: every group. 2/3 of the time come the group comes roaring back.
can get 2000% you after an internet bubble and you buy after 20%. tom: clients are calibrating the straight -- restraint. companies are more comfortable with valuations. with this reset, you have fear back into the group. alix: the health care sector has growth meeting lee -- meaningfully above the s&p, but it has a good run over five years, 117%. priceddon't think it is out at all yet. in 2009, the group accounted for 20% of the growth in the s&p, but have only accounted for 15% of the market cap. it has not gotten all credit, and they are passed cycle peak. half of stock are at a discount, but the medium s&p is above
market value. joe: you are looking at etf fund close. tom: we saw a huge outflow. utf-8 some people can sell every day. 5% of people left the assets last month. that is happened five times since 2007 for health care. windswhat kind of rally up happening when you have these arecators, if you tf flows going 20% decline in one month. what do you look like? is: i think the next month -- the stocks are flying. if you are bullish, three months, six months, 12 months, back to business. joe: you are just playing the odds. you look at situations that have happened in the past. most of the time, they go up.
sometimes they could blow up. tom: if this was about pricing, you have to ask yourself, even if it becomes a firestorm in washington, how quickly will pricing change? i don't think it will be 2015 and it is not in 2016. those numbers are rock solid. health care is a great place to look for stocks. alix: counterintuitive indicators don't seem to be working right now. all of those bullish indicators aren't working. wendy you expect them to start? tom: you are exactly right -- when do you expect them to start? tom: you are exactly right. a lot of computer to computer and technicals make a big difference. today marks an interesting reversal. we have bad news. how did the market levitate? it is bullish. alix: thank you so much, tom lee. fund'sg partner at
alix: i'm alix steel. joe: i'm joe weisenthal. "what'd you miss?" emerging markets worldwide. the institute for international finance says investors are expected to pull $450 billion from developing markets in 2016. janet, higher u.s. interest rates, commodities. -- china, higher u.s. interest rates, commodities.
alix: when you quantify it like that -- wow. matthew basel are joins us now. biggest through the step. what did you find? matthew: this chart shows how things have been flowing down. a year ago, this is the american workforce's collect a paycheck. how fast it is growing. a year ago it was growing 5.6%. now it is growing 3.6%. payroll is slowing down. the wage growth and the growth in hours worked has not really been there to pick up the slack and drive overall income higher yet. that is important for consumption, because we are not really seeing much credit growth right now. the question is, what is going to continue to provide consumption going forward if
this kind of thing keep slowing down? joe: what if the fed had hike interest rates? matthew: it probably would have been a messy day and markets, even more so than it was. i think janet yellen. state bullet. joe: you hear people saying that she screwed up, but you think that vindicated her? matthew: a little bit. there is not a lot of inflationary pressure. there is no rush to go. this is not necessarily a bad report. need to't necessarily do more easing or anything like that. it underscores the notion they have a little time. alix: the other number you are pointing out was construction share of total payroll employment. what did that tell you? matthew: this shows the growth in construction share in total. this is a common cyclical indicator that people like to use as an indicator of where the
business cycle is going. it is also slowing down. it is in line with that other chart. that thet another sign labor market was a lot hotter a year ago than it is now, and construction is one of the things that people talk about. it is a big case for the economy. we are not seeing that translate into higher job growth at the moment, even though construction funding is taking off. because we hired so many construction workers before the crisis. joe: what arwatching for next as we try to figure out the economy in the fed? probably the next jobs report a month from now. i don't think we have much between now and then that will move the needle for the fed. we might have another month of -- alix: nail-biting.
joe: don't miss this. the most touring election in the eurozone in a while. portuguese election. everyone expects the current government, which is pro-austerity, to win. look at it, but don't get too excited. alix: you should know about it. you don't want to miss this. it will be a big week for central banks. policy meetings in the u k, australia, and japan. we will also get the minutes from the last fed meeting and it will be interesting to see how many members wanted to hike. not at the time, it seemed that close. the minutes will hopefully shed some light on this. starting monday, changes we are excited about here on "what'd you miss?" were going to get a full hour and be coming to you from a brand-new studio with a new look. alix: the best thing is all that i'm so excited, i dropped my pen.
>> from our studios in new york city, this is "charlie rose." charlie: we begin with the latest of elements in syria. russia carried out new strikes. moscow said it was waging a campaign against islamic state, thathe report indicates the strike hit other groups that oppose president bashir al-assad. >> if it walks like a terrorist, then it is a terrorist, right? we are