tv Bloomberg Go Bloomberg February 5, 2016 7:00am-10:01am EST
his firm pioneered low-cost funds. now vanguard's ceo is seeing a whole industry under the gun. we will be speaking to bill mcnabb in just a moment. stephanie: welcome to a very big day on "bloomberg ." i am stephanie ruhle. you thought it was jobs numbers? no. david westin is off. emily chang is here from san francisco. but it is jobs day. the founder of stock tech -- and our own bloomberg intelligence economist, carl
riccadonna. let's get to ramy inocencio, who has first word. ramy: plenty of fireworks at the first presidential debate. hillary clinton and bernie sanders squared off last night in new hampshire on msnbc. sanders said he is the democrat who will represent the people. bernie sanders: our campaign is a campaign of the people, by the people, and for the people. secretary clinton does represent the establishment. i represent, i hope, ordinary americans, who are not all that in amer -- who are not all that enamored with the establishment. hillary clinton: bernie sanders is the only person who would characterize me, a woman running to be the first woman president, as exemplifying the establishment. battled over also clinton's ties to wall street.
she says that sanders is trying to smear her. republican marco rubio has moved to second place in new hampshire and is closing the gap with donald trump, who, according to a poll from cnn/w m you are, has 18%, marco rubio at 13%. president obama will propose a $10 a barrel tax on oil in his upcoming budget, but it is unlikely to go anywhere in the republican-controlled congress. the president wants it to go toward transportation and climate project. the tax is part of the administration's plant to shift the nation away from fossil fuels. global news 24 hours a day, powered by 2400 journalists in more than 150 news bureaus around the world, i am ramy inocencio. matt: let's take a look at futures, in the green slightly. you can see tiny gains in the
s&p contracts. take a look at asia or the moves are interesting there. in japan, down 4%. china up 1%. just want to give you a look at what happened this week because the chinese markets are going to be closed next week. the hang seng for the week down 2%. oil,nt to take a look at interesting that it is still down 5%. there have been a couple of up days -- really, just one significant update. -- one significant up day. the dollar is set up for his worst week, the last trading day of that week, since 2009, as the view on the fed and its readiness to raise interest rates or however many times you expect it to do that, changes. you can see the dollar down, 3.75% against the euro.
i also want to take a look at stock movers. company stories are a big deal, overnight, i should say. linkedin, down 31% after forecasting slower sales growth this year, maybe looking at $3.6 billion, $3.5 billion for the fertile year -- for the full year. there was real disappointment at decker outdoors, the maker of uggs. let me go straight up to a couple of companies because we are having some issues with some of the graphics, that are putting out secondary offerings. hess taking out proceeds from stock sales. you can see they are trading above that in premarket. mittal is trading at 3.77. there are a number of categories
you can choose from. if you pick nonfarm payrolls, you can enter your guess. we close this five minutes before the jobs number comes out. i am such a bad forecaster that i put a low number, because it is like taking out an umbrella in the morning. i know it will not rain if i have it with me. so if i have a low number, we will get a higher result. i am rooting for this economy. stephanie: i appreciate that. so am i. american dream believer. we will keep talking about the economy and jobs. --just over an or from now in just over an hour from now, the jobs report is out. brendan greeley, break it down. brendan: most forecasters who do not employ the matt miller take umbrella theory of forecasting are looking at 190,000 ads this month. that is not nearly as extreme area at the -- as the 292,000
that we got last year. whoever is sitting next to stephanie, hold her because she will fall out of her chair. there was great weather in december. a lot of the hires that might have been happening in the spring work frontloaded in the spring. -- were frontloaded in the spring. most economists leave the believereplacement rate that 5% unemployment is at about 150,000. stephanie: we are going to create jobs. the weather is better, people are going to go out and get jobs. these are not high paying jobs. does it continue to be deceiving because we need to see wage growth? >> wage growth, from my perspective, is the single most significant thing we are looking for. that tells us the state of employers, in the economy, both domestic and global. it gives us insight as to how
tight the labor market is. we know we have been creating a lot of wage jobs, low-wage jobs in hospitality, restaurants, health care. what we want to see happen is a shift. the mix of jobs, more higher-paying jobs, and more wage increases for people already working, which tells you employers are thinking i have got to hold on to my good people because it is harder to find new employees. emily: you are representing silicon valley today. how much is silicon valley creating? the jobs that are being created are in lower wage areas. >> two things. 10,000 developers that we have not found. so the fact there are some freezes and layoffs will fix the ebt there. but i would point out that uber, creating hundreds
of thousands of jobs, but they are also low wages because it gives people flex ability to be contractors. emily: matt, you are raising your hand. matt: i want to point out that we all feel like the economy is not growing as fast as we would like it too. but wage growth, if you graph it year over year, we are looking at 2.5%. that is not great, growth is not super quick, that that is better than a stick in the eye for sure. employment costs are not rising quickly either. you can look at this on bloomberg. carl, what is the fed paying attention to? this is a white knuckle time for janet yellen. now: the fed has already been moving at midyear or later. this is more of a white knuckle number in terms of assessing the vital signs of the economy. lastrowth collapsed
quarter and we were below 1.7 -- we were below on 1%. then we can say that there is progress. if it is a weak report, then you have to start wondering about the r word. stephanie: she may have to reverse course. carl: she will not reverse course because the benefit of reversing course will be far outweighed by the psychological signal of the markets panicking, going, my gosh, the fed made a mistake. a wet let me throw blanket over this entire conversation. this is a number that is in a monthly series that goes on forever. it is a very noisy number, subject to revision. it is not the world's greatest model. it is ok. it does a half decent job of giving us insight, but nobody on a single good number or a really bad single number is going to
start manning the life boats because we have seen this happen again and again. you get a really low number, and three months later it is revised. or you get a great number and two months later -- stephanie: except the only positive thing we have seen in over a month is the jobs number. carl: the markets are looking for direction right now. they have been chomping around for a week. while obsessing about a single jobs number is a bad idea, the markets do it. you will see a significant market reaction. outlier is another reason not to trust another. jobs growth over the past years has been one of the few high points in the overall economy. the fact that we are seeing wages pick up, as matt suggested, over 2.5% year over year, that is the best annual gains we have seen in wages for a long time. you and that -- you add the adp
number, which is their measure of real-time private sector in ointment, this number -- of , thate sector employment is in effect on the fed. stephanie: brendan, you want to weigh in here? brendan: i agree with carl. a month ago i would have said we are digging into the numbers. the fed has to look for signs of kind of wagey growth, anything that says 5.0% will show tightening in the labor market. i think the conversation has changed. what the fed is looking at has changed. what we are looking at is some sign of continued life and health of the economy. i am curious to see what happens to manufacturing jobs. they are predicted to have declined, and that is something that we saw in last month's wage data as well. that is probably what janet yellen is looking at.
carl: matt's story on wages here -- easy year-on-year comparison last month. the 2.5 will reset back to where it has been stuck for the last three years. stephanie: you are saying wages are going down? carl: year on year, it is going back to 2.25%. fell atp next, profits e&p in the fourth quarter. at european banking next in global go. ♪
earnings forecast to set a profit record for the japanese company. luxury cars are soaring. estimate the largest automaker will make $26 billion profit on the year, ending in march. the two biggest toy companies are talking about a play date, specifically a merger. hasbro approached mattel about a possible deal last year. once then, they have held again, off-again discussions. billionaire -- the billionaire head of the crest capital is being investigated. the probe has to do with possible conflicts from the fund that manages its partners. blue crest is not fall it -- is not commenting. shares jumping after the lender raised its dividend to the highest in eight years.
b.n.p. paribas says it is restructuring its investment bank to boost profit. the cfo spoke to bloomberg about cost-cutting. >> we are doing well. there are headwinds, particularly around regulation. it is not clear how or when they will fall. -- west like in 2012, today have a very good profitability. plan toembark on is a improve this by eight points. those three letters -- -- those three levers -- focus, growth -- improvement. stephanie: the banks are under pressure to shrink securities and focus on their more profitable businesses. we have been talking about european banks all week, and it really feels like now, is this not too little, too late? matt: they have been absolutely
getting crushed. whether you talk about deutsche bank or credit suisse or ubs, there is so much to talk about. one of the things all of them are doing is talk -- is cutting down on securities units, but it does not seem to be helping that much. right here i have price-to-book ratio, and the blue line are u.s. banks. they have come down a little bit this month. rough month for stocks across the board, but look at the drop european banks have. this is a normalized chart. you can check it out yourself. but if you look at the price-to-book ratio, we are looking at half european banks. u.s. banks are trading at slightly higher prices than their book value, but european banks are trading at half their book value. so it is really disturbing for those investors. seeing a popey are
because they are going to see a dividend. that is not a long-term positive. there does not seem to be a path for these european banks. we are just going to cut more jobs. how does that help in the long term? job cuts are a short term fix. i'm curious why so much of that began in 2016. that is a straight line from january 1, not really part of a longer term trend. why do investors think european banks are worth half as much as u.s. banks? it is anyone's guess. stephanie: what is left? we are down to the bone. barry: the other issue is when you look at m&a, investment banking, ipo, venture capital, and asset capital in the u.s., there has been a fairly robust growth industry with little hiccups. matt is jumping to say something. same chartu take the
and do not normalize it, if you put in the absolute values, you can see this is a trend going on for a long time. this is a five-year look at european priced banks price-to book, and american priced banks price-to-book. barry: why do investors think european banks are only worth half the book value? stephanie: i dare you to find me a deal where you see a european bank on the left. it is u.s. banks that are pushing harder, pushing forward. if anything, europeans are leaning out. barry: that shows that our economy is a few years of japan's economy, which is a few years ahead of the european economy, in terms of recovering from the financial crisis. barry and jeff are staying with us. when we come back, linkedin.
emily: linkedin cut to neutral from buy by analysts, shares down after the company said it is forecasting a slow year of revenue growth. it lost nearly a third of its value after fourth-quarter earnings. down 30% premarket. their talent solutions business is bulletproof. delivering on is the forecast this year, and they are being punished. i think it is oversold.
emily: when it comes to user growth and mobile, do they have a problem? jeff: the question is, how can they continue growing as much as they have done. they have done a good job of monetizing. the issue is, people just want to see more of linkedin. emily: is a facebook comparison completely unfair? they have advertising as a big part of their business, but it is not growing. stephanie: linkedin does nothing for me. facebook is a massive platform that offers so much more. emily: facebook is also addicting on mobile, and linkedin is not. jeff: the issue with linkedin is it is a great company, really well run. the problem is people want to see more innovation. the reason facebook is innovating so well, beating numbers, everyone things about, but, yeah, facebook -- should i buy facebook instead of
linkedin? stephanie: linkedin is on pace to finish at the lowest weekly value in four months. emily: let's talk about valuation. winter is coming, winter is coming. is winter here? jeff: yes. about six months ago we reached a peak of private valuations. some point the number of very smart people said move forward, and that creates a self fulfilling prophecy were people offer lower valuations. what we see now is a ripple effect where growth round and even the series in the early 30% or lower at valuations than they were six months ago. in my stage, we have not sort of tooe it yet because we have
many funds trying to compete for deals. so this offers sustained valuation. but it will go down as well. let's get more specific here. winter is here for what kind of unicorn? where you have valuations be more reasonable, i do not think it is actually winter. then you have the 150 or 160 unicorns, which are out there? stephanie: give us names. r.ff: it could be ube are they worth a lot of money? absolutely. are they worth 62 $5 billion? emily: would you put them in the same category as airbnb? what does it take to actually have a $10 billion public market valuation?
potentially two or three off where they are now. stephanie: one of your favorite investments, sit bit. fitbit.d fitness -- connected fitness -- what is your take on that space? jeff: the question is, how does the market react to the number for this year. they will get the guidance p or the retirement -- the guidance will determine whether fitbit will pick back up. stephanie: we have to take a break. we are not going anywhere. we will be back. when we return, the vanguard ceo. ♪
of course, tom keene is joining us from must-read. here is first word news. russia thatelling bombing syria is hurting efforts to stop the civil war. in amsterdam, russia needs to start a calm de-escalation of its efforts. thousands of syrians are fully eating to turkey. the u.k. is taking steps to prevent the spread of the zika virus. must spray insecticides inside their airplanes. that is being done on airplanes leaving countries affected by diseases like malaria. a bipartisan energy bill has spent more than a year in the making having to do with the lead-poisoned water in flint,
michigan. global news, 24-hours a day, powered by our 2400 journalists around the world. stephanie: it is time for morning must-read. tom keene is here from surveillance. shelly banjo writes about dunkin donuts and their business plan. she is wrong. to eat dunkin' donuts? >> on occasion, i've been known to have a cup of coffee. let's go to the morning must-read. tom: good doughnuts is digging its own whole. before it spreads its munchkins and donut holes even further. munchkins -- donut holes. stephanie: focus, tom. tom: duncan does not have the same reputation for quality as
starbucks. this is the most outrageous comment made by bloomberg in 25 years. stephanie: that is because you are from boston and dunkin' donuts owns that town. globally, they are agreeing. out of london, they agreed that dunkin' donuts has a certain magic. in boston, dunkin' donuts is more expensive than starbucks. i don't drink coffee, but that doesn't seem right. tom: mcdonald's is doing better. there's nothing better than competition. they got old is doing the age-old thing which you have written about, you grow too fast. they're expanding into retail, whether it is michael kores or dunkin' donuts, it is a huge challenge. what about other competitors? the space of not being starbucks
and competing with dunkin' donuts? tom: i don't know that much. i don't know the tim hortons' angle. i know that it is sacrilege to go out for dunkin' donuts coffee. >> it is decent coffee, but it isn't starbucks, that is why it costs 1/3 as much. stephanie: does dunkin' donuts have a home in san francisco? we are dunkin' donuts deprived in san francisco. we prefer dying that -- we prefer designer drinks. >> there are occasionally lines. tom: the article talks about the competitions. in awere doing that slowing economy. stephanie: are they trying to expand too much? strategy going to
work? we will send you back to the toio and turn our attention the world's biggest mutual fund company, vanguard. 2.4 trillion than dollars in assets. bill mcnabb, the ceo and chairman joins us. passive funds and etf? in 2016, 1 would think when we were getting back to fundamentals, you need active management? bill: the whole story is around cost. investors have focused on it leads to that long-term outperformance. indexing is the purest form. what we are seeing is interest in the low-cost index revolution. flows in january, as an example, were exceedingly strong across
the board, especially in equities, which you thought in market volatility would not be the case. it is known as the vanguard effect. when you move into a different space you drive your these lower and the entire sector has to drop these. are you still in a mode of taking your cost structure lower? is that even possible? the lower --ly, when you heard our level to gets harder to do, but we think we have opportunities. last year we reduced fees of 100 funds. go.hink there is room to have created size and scale at our firm to pass that back to the investor. stephanie: volatility for the
foreseeable future. you pay for quality. you would not ask for a discount surgeon, why we you want discount investing? bill: if you are paying more and getting more, that would be a good theory. although the academic evidence is the more you pay over the less yourhe returns. the important thing is for investors to know their goals and set reasonable expectations. then to implement a diversified strategy in the lowest cost manner possible to meet those goals. that is what we are all about. stephanie: don't goals need to be met with managing the market in fires -- the market environment? it has been a momentum play to be long and strong, irrelevant of your fundamental views. this year, it is a different game. so far, it has been
extremely volatile and more negative than positive. i would tell you that that is normal. we have had 12 corrections. they occur every couple of years. the markets spend one third of their time in correction or in bear market territory. i think it is difficult to time that. the best antidote is to have a long-term method allocation and constantly rebalance back to that. barry: the hottest area of growth amongst indexing has been the smart beta. the so-called various ways of construct doing and in -- of constructing an index that are not market cap based. have you explored that? will we see any smart beta products from vanguard? bill: the smart beta phenomenon hats off toall,
who created the name. it is market genius. it implies that cap weighted index is not smart. we look at it as a mechanical way to get active exposure, which can be a reasonable thing to try to achieve. when you look at active manager performance and do attribution, it is as much factor-driven as security selection-driven. they try to replicate those factor bets. our caution is do not look at it as a substitute for indexing, look at it as a substitute for active managing. if you want to bet on one or more factors, it can be a reasonable way. dr. phones in europe for that purpose, so that advisors -- we introduced factor funds in europe for that purpose. addednie: there is an
complication for the view in the market, liquidity. you have over $3 trillion to manage. how much of a concern is it that liquidity is being hampered, especially with all of the regulations? bill: let separate that. on the equity side, we continue to see tremendous liquidity. you can see looking at index funds how closely they track. we are able to put money to work in a large scale. on a fixed income side there has been a lot written. we continue to find adequate sources of liquidity in the bond market. our bond funds tend to be higher quality than some of our competitors. i think, certainly, there will be challenges in some of the more distressed areas, the junk year parts of junk bonds.
the regulations on dealers are hampering that. barry: we have the last phase of dodd-frank money market rules coming into play in october. how will that affect what you are doing, and liquidity in general? if it will be more challenging to have money market funds that can provide additional yield and still be quoted at $1. is happening is there will be a division of money market funds. funds that are for institutions will go to nav and no longer be at $1. certain requirements had to be met. with thoseply requirements so that we can continue to operate at $1. in the industry, you are seeing more movement toward treasury
and government-oriented funds. there will not be as many prime funds available. barry: that is the take away? bill: definitely. stephanie: jobs numbers at 8:30. your guess? bill: i think it will be weaker than last month. frankly, some variation in the job markets is to be expected. there is too much attention being focused on short-term phenomena. stephanie: there is $10 in it for you, take your number. bill: 835. stephanie: we'll let you know. vanguard ceo and chairman bill mcnabb. technology is exploding. we will look if your job is at risk when we return. ♪
stephanie: welcome back. i'm in our new hpe greenroom. we are here with janus capital group grove's. capital's bill gross. your bloomberg business flash. the third-largest lender in switzerland will pay millions of dollars to settle u.s. tax evasion cases. admitted they help hide millions of dollars from u.s. authorities. struggling japanese electronics maker, sharp --
ramy: that would happen of the company goes public or is sold. emily: innovation and technology has created and destroyed jobs. joining us is the former technology advisor to hillary clinton. so great to have you here. let's talk about where innovation is destroying jobs. is it a creator or job destroyer? creator of the wealth. it is a job creator and technology, but it is bumpy. it creates jobs and displaces
jobs. they key is to position yourself and your country to adopt to the changes. stephanie: how? xyec: some of it is very un-se but important like vocational education and community college. we need to scrap the way we have been doing vocational education. we need to destroy the way community college educations are delivered. they aren't preparing people for tomorrow's jobs. that is the section of the job corps that is the most vulnerable. at youre: and you look investments, do you think the innovative companies looking to hire -- do young people have the skills? >> we don't have enough engineers. we are trained to move them from other positions in the u.s. from outside of the u.s. where we have a better policy. we couldn't find them.
companies are shifting jobs. whichng about the economy has created hundreds of thousands of jobs for those who short-term jobs. they're looking for flexibility. new types of jobs. willanie: the person that study engineering is not the same person that will study high school carpentry. alec: that the person that studies high school carpentry can get an assistant admin tech job and do the $55,000 a year cyber security job. that is a pretty good job for working-class americans that won't get a college degree. there is a debate on how many jobs robots will eat. mark andreessen says it is overblown. you are underestimating human creativity. what do you think? the: i think robots in cartoons of the 1970's will be the reality of the 20 20's.
the net of this visit will produce human labor. robots will do work that is historically just a manual and repetitive. they won't do work that is cognitive and nonroutine. this will go from justice -- from just displacing manual work of low-level white-collar work. the question for the united states is are we going to be the country with a lot of headquarters for robotics companies? if we are, we can export these to the other 100 95 countries on earth and it will be good for us. stephanie: we aren't. countries like france are further ahead. alec: there are five or six out of the 196 that are doing well. isnce is doing well, so
japan and korea. to south korea, japan, i feel like i'm stepping three years or four years into the future. stephanie: we are 45 minutes away from the jobs number. to get that number and wages up, we need to look at innovation. there is a worry companies won't spend on innovation, they will go into survival mode. barry: my question for you, if i run a small office with 15 people, we cranked out so much productivity and content using a dozen expensive software tools -- everything from salesforce to oh ryan -- doing -- salesforce work of 50oing the people. it is allowing it to be so
efficient it is pushing jobs a hide? alec: the short answer is yes. you know who is getting hammered? people who are mediocre of their job. those 15 doing the work of 50, i bet they are really good. the people that aren't hiring, the 35 being replaced by software, they are the non-swimmers. thus the rise of disgruntled americans supporting bernie sanders and donald trump. , salesforce, and you meant to say bloomberg. matt: you may have openings, you may not hire me. i'm not qualified. that is a growing problem. look going back to 2006. we have jobs opening in white, and actual hires in orange.
for the first time, job openings are rising above actual hires. one concern that business leaders have is because that is because we don't have people qualified to fill the jobs that are open. intech specifically, what jobs are being destroyed? jobs that he was referring to -- we have software making people more productive where we need four or five admins. create value? what value can every employee offer? whatever value you add, they can come up with. emily: you worked with secretary clinton. if you were in washington, what would you advise the president?
alec: i would be focusing on the industries of the future. the united states is a high cost labor market. we cannot compete on wage prices. we have to focus on killing the companies are creating, focusing on k-12 education, vocational education, and community college. all of them marginally employed people cannot do the jobs we are producing. stephanie: if you're the president you want to have young innovators there for counsel. we want to know if these companies make money. traditional corporations aren't getting that kind of love. we aren't getting more manufacturing jobs. we are romancing innovation, but we don't know if they will be profitable. alec: over the short term they are producing high paying equity-backed jobs. the case to build the work force even if they are not cash flow positive -- stephanie: the bottom could flow out. that ahe difference is
lot of these companies are coming up with real business models. uber for thiss a and uber for that, and on demand laundry delivery -- alec: they're the ones producing jobs. jeff: they will find a way to profitable, or they will be wiped out. .hat is our job we figure out the number of opportunities we try, and only a subset becomes the next salesforce, links in, or fitbit. barry: how to we get more people qualified for the so-called stem jobs? science, technology, engineering , and math jobs? companies are having hard time finding employees. that is why the jobs numbers are
what they are. to money.omes down we put a lot of money into paying taxes. we pay for the vocational education, community college educations, of most americans. there are huge bloc grants to do exactly what they have been doing since the 1970's. this is something democrats and republicans should recognize. we live in a high cost labor market, and we need employees they can fill job openings. emily: after asking about hillary, the jobs number means something for her. i know it has been hard for you to watch this presidential campaign, but what do jobs, or the lack thereof, mean for her? .lec: i very bias i think the choppy or the waters , -- the choppy or the waters, the less likely voters are to support a socialist or a far
right candidate. sheehan marco rubio are running to the middle, and probably the ones more balanced than socialists or fascists. stephanie: they aren't socialists or faxes, but it's not right down the middle. if the waters are choppier and there is more volatility, it will be harder for hillary clinton to take the baton from barack obama? think so.n't cia such unknown entity, even those who don't like her know she is a steady hand. looking at a young senator from florida who has never been an executive, a socialist, someone from the far right, they will be comfortable with 68-year-old hillary clinton who is a grown-up. emily: the socialists have been good at using snapchat. ernie uses snapchat, but
not necessarily someone i want to run high economy. stephanie: the markets are focused on the job number. thank you for joining us. author of "industries of the future." we will be back with more. we are 35-minutes from the january job report. economist expect 190,000 jobs. send us a tweet with your gue ss. futures in the green. ♪
aren't paychecks? there is speculation this is the year we will see wage growth. president obama's $10 tax on oil is aimed at rebuilding the infrastructure. republicans call it dead on arrival. ♪ stephanie: welcome to the second hour of bloomberg "" i'm stephanie ruhle. david westin is off this week. emily chang is in the house from san francisco. president obama's plan might be dead on arrival according to republicans, but it is on fire. krueger.lan .e have barry ritholtz
we're not letting our view columnist leave. here is our first word news. ramy: it was more intense in the latest democratic debate. in new hampshire bernie sanders sparred one-on-one with hillary clinton for the first time. he criticized her for taking donations. hillary clinton denied she is beholden to wall street. mrs. clinton: if you have something to say, say it directly. you will not find that i ever changed a view or a vote acres of any donations i received. represented mynd constituents to the best of my ability. i'm very proud of that. ramy: fierce words for mrs. clinton. she is behind bernie sanders heading into the primary here there will be a meeting next
week in cuba. pope francis will meet with the head of the russian orthodox church. eastern and western christianity split almost 1000 years ago over theological differences. the explosive force of a volcano captured on video. it happened in southern japan. 100 have more than volcanoes. 57 people were killed in an i uption -- in an erruption last year. futures, veryat little change. adding one point. dow jones adding 12. looking at oil, we just showed that oil for the week is still down 5%. today, we are rising 1%. $32.06.arrel to
the correlation has been very strong. that is why we are hanging in the green. looking at the dollar, although it is rallying big today, it is set up for one of its worst weeks since 2009. here is the dollar over one year, up 5.7%. this is the bloomberg dollar index. i will skip ahead to my terminal . i want to show you a cool function, world trends. you can manipulate the screen to show you different things. i have chosen currency backings and put in g-10. it shows you the trends of different currencies. the dollar is trending up slightly. the euro is under the new zealand dollar and trending down. they are turning around. tos screen is excellent watch for following asset
classes, especially for currencies. looking at stocks trading, here is the year to date. you can see we are down big. .ven bigger is linkedin its worst day since its ipo, awn 31% after forecasting slower year of revenue growth. for aream was looking number closer to 4 billion dollars, they will be closer to $3.6 billion. use the internet stocks are down . facebook, netflix, twitter all down in the premarket. we have breaking news. breaking news on volkswagen. vowgy. up all of the bloomberg news on the terminal. annualgen will delay its
results and annual opening meeting due to continuing issues with omissions. -- with emissions. there have been estimates it could cost $70 billion to recall and fix all of the diesel problems. most on the street think that will be lower. $6.7 billion. they may need more. they need to figure it out. stephanie: the fact they are delaying it ups our uncertainty. that will take us down further. jobs. following the jobs number coming out in 25 minutes. the labor department will release that report. bill mcnabb says 145. you? is 190.e consensus
i would take the low side. somewhere between 145 and 190. emily: that is quite broad. stephanie: what is your number? alan: 168. stephanie: why? if you get within 160,000, you are on target. we have to slow down. .e will run out of workers we have a little softness in the economy with exports being weaker and what is going on in oil. i would not be surprised if we see some movement down. it will be strong enough to lower the unemployment rate. i would not be surprised if it gets down to 4.9%. stephanie: if we will run out of jobs, what about raising wages? years the story for two
has been, congratulations, you have a job. let's talk about the paycheck. you can't say, going to the store, i would like to buy something -- i have a job, let's just do this. you want to look at it on this showserg, average hourly earnings. you will see that the trend is up. it is at 2.5%. your way to growth concerns, maybe you haven't had a wage recently and that is the problem. barry: that is nothing to brag about. second of all, there's a good innce that reverses course the year-over-year comparison. that was an easier comparison last month. you that -- matt: we will still hold it
higher than inflation, right? alan: you have to look at wage growth and inflation. inflation has been weak. wages have been growing stronger than in the late 1990's. barry: look at it versus services inflation not commodities inflation. we're not really seeing anything caustic. you are also looking at commodity prices, which are collapsing. the whole energy-thing is in depression, according to one ceo. services prices are closer to 2% 2.5%. say that comes down to 2.75% -- you're right about the year-over-year, i would like it month over month to get a better picture. i suspect we will see continuing overgthening when you look
a few months. as the unemployment rate gets down below 5%, one would expect stronger wage growth. last month, we saw a lot of people coming from the sidelines and reentering the labor force. one criticism about the 5% unemployment rate has been half of it is people retiring or leaving the labor force so they are no longer counted among potential employees. are we seeing signs people are returning to the labor force? what will that mean for the unemployment rate? will seeon't think we a big raise in those coming back to the labor force, despite the job openings. is becausei say that historically when people leave the labor force, they leave. in labor force participation is because of
demographics. they are retiring. and also because labor or's participation for women stopped growing in 2001. was morefeeling it women coming into the labor market. that ceased before the recession. maybe the drop is cyclical. ordinarily, you don't recover. in the 1980's we did not recover that cyclical drop. i don't expect a rise in labor force purchase a patient, i have been anticipating and drift down. stephanie: what is your number? barry: for the jobs? stephanie: what is your number? 300-3000 --303,000. emily: what happens if we raise minimum wage? the person sitting to your
right wrote a research paper with david card about what happens near a state boundary where on one side of the state division there is an increase in minimum wage, and on the other side there isn't. tell us what happened in those circumstances. alan: we looked at fast food restaurants comparing pennsylvania and new jersey. we saw stronger job growth in new jersey. what other studies have found is the same pattern. that minimum wage increases as long as they are in the moderate range without those full effects on employment. they can bring more into the labor force. one reason we're not seeing the ise growth in the 1990's
because the federal minimum wage has been stagnant since 2009. barry: when we look at places like seattle, washington, seattle, in san francisco that have been raising minimum wage -- what is the impact on employment? ranges, hardly any. the problem is when it comes to wage growth nationwide, it is a small share of all workers who are seeing a minimum wage increase. barry: there is one thing bothering me about the minimum wage and the hiring thing. i know from anecdotal evidence from someone who has a business that the big thing going on in seattle is that -- stephanie: they are drinking dunkin' donuts coffee? barry: tim hortons is the best coffee in north america. raisedsay that when they the seatac area, the minimum
wage, what happened was that people were taking the money -- hey, this is great. you aren't entitled to other benefits. they said, wait. you're making more money, but you won't get the benefits. they say, cut my hours. he is saying that the system always gets changed. alan: that is exactly the point. we have more to cover. to the january jobs report continues. we are left with 20 minutes. we will look at futures. they have been in the green all morning, but we are seeing a slight fall back just ahead of the number. you are watching bloomberg "" we are breaking down the jobs report in a few.
ramy: happy friday. two big toy companies are merging according to people familiar with the matter. hasbro has approached mattel. they have held on and off again discussions. mattel has been trying to revive its barbie business. hasbro has transformers and my little pony. spin off itsld investment bank and sell its africa unit. they so 40% less than its book value.
who are the financial professionals most unhappy with with the bonuses? bank of america's london unit. those at jefferies group are the happiest. $898,000ge bonus was for someone with the title "managing director." january jobs numbers out in 15 minutes. they are looking at jobs revisions. matt: alan pointed out the last time he was on, or the time before that, that during the downturn revisions were to the downside. we thought we were adding more than we were. during the recovery, revisions were always hire. -- always higher. the first read showed that we were. are praisingomists
us for a slow down this year. you expect revisions -- is the first read going to be with the number is? that is an excellent question. we won't know for several months, but it is possible. if you look at the pattern of revisions, it is remarkable that companies who responded late had stronger job growth. as the data came in in subsequent months it boosted job growth from previous months. it is a frustrating pattern if you are in the white house and getting the numbers. the first number is plus 75,000. it is problematic for policymakers and a public relations standpoint. it is problematic for the country to understand how the economy is doing. emily: why the disparity? economy is so
broad and diverse, the even 400gh this is a survey of thousand establishments, only 200,000 are initially responding and they are not a representative sample. we underfund statistics in the u.s. when you think about the money, investments, and policy decisions that ride on it, no country would spend as small of a share on analyzing the economy as the u.s. government. won't see those budgets increase for data collection, but what is orange book telling us? that is something we created at bloomberg several years ago where i read 300 quarterly earnings transcripts and excerpt the economic comments they make. see moretarting to recession comments being thrown
out in conference calls. ceo,ne of them, not one said we are in recession, on the cusp of recession. ceo justsay -- one said, we have a depression in the energy complex. we have a recession, a slight recession, and manufacturing. the consumer is doing fine. that is why i went with an extremely high number on my guesstimate. things are not that bad. you would think if you read the business press that the u.s. economy fell off of a cliff in the past four weeks. ago or five weeks ago, arguably, you had 292,000 new jobs. what happened? what happened since then to the consumer? emily: the weather?
stephanie: we have to leave it there. if you are market participant you are looking at this number. we are in a scenario where we are facing a wall of or a. -- a wall of worry. even though we are focused on the jobs number, even if we get a positive number am a it is not all rainbows and unicorns. you have to factor in -- china in theace a devaluation next quarter. if they do, it is game on. things will look good anywhere. richard: what will that do to consumers in the united states? i'm talking about market participants. this is just one moment. if we get a great number, it doesn't mean we're back to a bull market. it is one factor in a broader environment. bloomberg view columnist and
matt: i want to welcome you back to bloomberg "" and stephanie's side for a moment. wage growth is fairly sluggish if it is on the same axis with unemployment. that is not necessarily bad. the unemployment trend down to 4.9%. we do want a stronger number in wage growth. economistsely due to in our survey to turn down slightly.
..9% is likely to stay the same something else that drives markets, the fed is huge piece. lately, it has been all about oil. in our early meeting, we will talk about the next moves. jason, thank you for joining us. banks have come out and have said they expect oil to stay low for longer. to agree we will see the $30 $35 range for 2016? of the yearack half looks more promising than the first half. as long as the market is oversupplied we will see downward pressure on prices. the market will balance around the fourth quarter. we are encouraged for the fundamental stages of a price recovery. matt: supply has only been curtailed globally by 1/10 of 1% over the past year.
how likely is it you see supply come down? demand is not likely to jump. it is highly likely. we are seeing that in u.s. production. 2015production in april of the client. when you see the capital spending cuts coming out of the oil company being reported, it is a significant decline in u.s. production by the end of the year. we are seeing it in other non-opec producers. matt: thank you. a quick break. we will come back with the job numbers. stay tuned to bloomberg "" ♪
january jobs report where economists are expecting 190,000 payrolls added in the unemployment rate to hold steady at 5%. as i said, alan krueger is with us. guessed 168, i have guessed 1621, emily at 172. brendan greeley outside of the labor department with the numbers. rendon: 151,000 or you are all wrong. last month's was ruvell is revised down. we are still above the free -- three month moving average of 231,000, 151000 and that is right at the replacement rate that economists say will keep us taking a long at unemployment. unemployment now at 4.9%. we are already at the long-term normal rate of unemployment. what do we do? we look at signs of tightening. work week picked up. hourly earnings also up .5%. that is some good news.
some sign of tightening, some sign of wage inflation. anticipation also checked up from 62 did succeed 2.7%. a little noise, but at least a bottom on that. let's dig into the numbers. the ads on the services side, one hundred 18,000 down from 197,000 in december. manufacturing, one bright note, up 29,000. there were gains overall in retail. food service and health care, again, don't forget the manufacturing number. that is a big deal to a lot of noise here, but it is not bad noise. some sign of tightening. notmber that is disappointing but slightly below estimates. 151,000 is 4.9% on a planet. >> there we have it. slightly lower number than we predict. n: i think this is a solid report.
i wouldn't focus on the headline. i have been expecting a slowdown in table drop growth. i sure you credit on saying i thought the unemployment rate would fall. is right, the manufacturing number is surprising. good news given what has been going on with the value of the dollar. the wage growth at half a percent, and that keeps up a whole year, you're talking about 6% nominal wage growth with inflation still low. i would view this as confirmation that the job market is continuing to be strong and that we are getting close to full employment if we're not there. >> how is the tenure? -- 10 year? matt: it looks like they are selling off the bonds, all to an extent, but it is not a huge move. a predicate futures, you can see they have come down substantially. as well.selling stock it is always interesting when you see the bond market and the equities market moving in the same direction contrary to what you would normally expect to happen.
you see futures coming down right now, when 4%. the -- .4%. the 10 year yield at 1.88%. an interesting market to watch, and i will continue to dig into it. collects interesting market to break down. we will take you to bloomberg radio where michael mccain and tom keene are speaking. tom: bloomberg radio plus worldwide. jobs day, we speak with bill gross of janus capital. bill, 4.9%, in the history books, you and i studied it is a good number for the american economic experiments. why are we so miserable at 4.9% unemployment? bill: one of the reasons would be the underemployment rate. that didn't change. that is around 9.9% or so. there are a lot of people who
are unemployed meaning just working part-time or not looking for jobs. the deceptive nature of the , isployment rate, i think the problem. it speaks to a smaller and smaller portion of the labor force. i think, unfortunately, because the fed uses that rate in models such as the taylor marlowe -- taylor model to forecast interest rate policy, they are focusing on the wrong thing. michael: your business is investing on whether or not we will see inflation. , betterrising wages than expected this last month it what do you think of that? rising wages, but we know they were 0% last month because of some statistical quirk. around, as you know, is 2.5 or two points extra that is what the last two months of been. i'm heartened by the, but i
think it is more statistical than anything. we know over a longer-term basis that real wages are suffering and that the middle class and lower class, a term that isn't used anymore in political circles, but all of those in combination aren't earning a wage that justifies growth in the economy of over 2%. i think fed officials and central bankers everywhere need a certain rate of nominal gdp. real growth plus inflation. for the last 12 months, it has been 2.9%. to me, the 2.9% represents the return on capital and it doesn't cover the cost of capital which is hard to estimate. a 16 pe is a 16% cost of capital. 2.9%, can only grow at you have to basically take her
pes.in debt or have lower you need nominal gdp growth in the united states of at least 4%. that is something that interest rate policy has failed to reduce that produce over the last five years. michael: you don't see an inflation issue building leaf phillips curve back yet? bill: i don't see that. two and a certain extent, you could say on a global basis, globalization has provided labor for the past 10, 15, 20 years. perhaps ever since the fall of the curtain in russia and the late 80's. some of that is being absorbed. there is no real problem in terms of labor. i wonder why a central bank has absorbedfocused and so as opposed to the cost of interest rates and stock prices. it seems to me to be unfair.
tom: a turn to the market, futures at negative eight. i don't want to overplay what we see any market. this question has nothing to do with the super bowl. i am sure you are at the 50 yard line with the san francisco 49ers. america is looking for the big victory on the labor economy. it is not there. can policy fix it? can mr. trump fix it? in president obama fix it? what is the policy prescription within the caution of your research notes? the policy prescription is not just mine alone. it comes from summers and a very noted economist. simply commonsensical. beenmonetary policy has
drained of his potency, and certainly, we are seeing that now. this goal policy has to take up the slack. the mindset is and taking the end. look at what happened in europe with germany and the balanced budget, regulation that is enforcing the entire continent. look at the united states in terms of the republican orthodoxy. look at the imf. lending money as long as these emerging come -- countries in extremis balance their budget. if you're not going to spend money on the physical side, the monetary policy can do the job. drug heir to yellen and others, they have complained about it for a long time. it is a limited task. tom: you have to invest in it. your clients and shareholders
had to in the financial repression we are in. if we are anti-keynesian, if we are not going to stimulate as should, what is the solution to break ourselves out of this low return lethargy we are in? me, that simply is the solution. -- monetarymonta policy, central banks continue to pursue the theology that the lower and lower interest rates the more you can create a wealth of fact that eventually flows into the overall economy. i think, to be fair, to some extent, that has been true. europe is above the line, japan is above the line, the united states has averaged 2%, but it is anemic relative to post lehman days. lowering, lowering interest rates into negative territory has no limit as draghi , to me, that is a
negative aspect at this point in terms of effects on the innate -- on the economy. tom: we are in a time of completely unorthodox economy and investment. how do you invest given negative rate monetary economics? the logic is, and it doesn't work all the time because interest rates are volatile and stock prices go up by 1% or 2% a day and down by 1% or 2% today, but, if a central bankers are true to their adage of being gradual in any -- noton and not being surprising markets, what an investor can do, basically, is assumed that and sell that assumption in the form of volatility. tom: we are going to come back with bill gross of janus capital.
>> more fallout from volkswagens and emissions scandal. now, vw is delaying its annual results as they questioned their emission test. billionaire michael platz blue crest capital is being investigated over internal funds according to people familiar with the matter. they say the progress to do with theible conflicts including fund that manages money for their partners. blue crest is not commenting. that is your bloomberg business flash. withanie: we are back princeton economist and former chairman of the white house downfall of economic advisers, alan krueger. people are looking to get paid out their $10. u.s. employers added to an 51,000 -- 151,000 jobs much lower it then expected. you thought this number would make sense because we couldn't
create that many more jobs. when do you think we will see a real push on wages and if we do, will that be the factor that helps the u.s. economy? alan: i think that will be the next factor that helps the u.s. economy. that will help consumers. i don't think it will be overnight that you see wage growth take off. i think what we are seeing is wage growth going from 2% nominal wage growth to 2.5%. i think we will probably see a go up from 2.5% to 3%. stephanie: when i get more people and the workforce? alan: it will bring back some. most of what we saw was a predictable effect of the retirement of the baby boom generation and an end of a great wave of more and more women lining the labor affairs -- labor force. and last week i just our policy to make work more flexible and possible for women to raise families, we won't see much reversal and a. chicago stock exchange and says it is being
sold to china led group. i'll you to break this down for us. this is yet another example of big china money taking money out of top -- china and spending it here, a big, solid, you equate -- iliquid places. matt: we don't know anything how much this costs are having the business is. the chicago stock exchange is being sold to a china led group. we heard a couple of days ago about a china led group thinking about spending big money, $40 billion on and add company. that is obviously a much more important market to china than the chicago stock exchange. and threea billion people to feed. the chicago stock extent is a small business. stephanie: it is, but this is another example of sentiment change of where we are seeing money shift to. keep in mind this deal is pending because you have to get regulatory approval for a you like this. it is just another sign of the ship we are seeing. this is surprising?
an indication that the u.s. is the strongest, safest economy in the world. where would you rather have a stock market? china or the u.s.? stephanie: clearly, the united bests has been deemed the place to be. as we see more and more money flood here in the dollar strengthened, are we forgetting the fact that that hurts things globally? alan: it doesn't hurt things globally in that it helps other countries export more. it is affecting our net exports. it is affecting our manufacturers. we addedthat manufacturing jobs in january is a sign that we have enabled to whether those effects, at least last month. professional business services, education, concentrated in those two groups. a professionalok business services, that has grown gangbusters throughout the economy. if there is a small pause in
that sector, that is not an indication of a significant slowdown. private education services which declined about 29,000 is a possible seasonal reaction good eye opening we had a bubble in terms of evil going to post secondary -- in terms of people going to post secondary schools. also if you live at the demographics, you have less cohorts. -- nine emily: thank you so much for helping us prettied up good i want to get your tom keene and michael mckee on bloomberg radio. studio, wen a radio are with bill gross of janus capital. we have negative interest rates. i want to give you a two-part question. if i look at now and two or three years from now and i have negative rates and they are going even more negative in certain countries or in new countries, how much of the 10 year yield is affected at present by the flows in the u.s.
and where will that be in a couple of years if the new tool is negative interest rates? : very complicated question. tom: but it is it important. it is hard to gauge. for instance, we know that opec related countries and their sovereign wealth funds have been selling treasuries because they are not as profitable as they used to be. we know that china in their relative toaintain the dollar has been selling treasures and draining reserves. sale ofhase or treasuries is significant way dependent on the price of oil and on the currency level that major countries want to maintain. is that a right hand, left an answer? i suppose it is. it is very difficult to know. one third point is that the budget deficit is declining and that the issue -- issuance of
treasury and long-term treasuries is being cut quarter by quarter. to be going to bills instead of long bonds which to me is astounding and surprising that low interest rates that we have. case, you have treasury, china, opec and oil. all related in terms of cross flows. it is very difficult to know. i would say ultimately, it is the fed funds rate that determines the 10 year and determines the five-year and those are the critical elements going forward. if the fed stays where it is, i don't think things will move much from where they are. michael: does that suggest that the fed isn't able to target monetary policy where it wants to? bill: i think so. to extend this to other some dutch central banks, once you get close to zero and go negative, the rules change.
for instance, the ultimate attack against central banks on part of the consumer is basically to hold cash. we have seen in the last week or two, lots of papers from the imf and others about why central and cann combat this basically avoid the problem of consumers taking cash as opposed to negative interest rates. i think at the margin that that really is a significant aspect. for instance, the ecb went down minus one or minus two, the people would simply hold euros. the financial economy would convince someone like a cco or cmo, collateralized cash obligation in which you invest in cash. let's go there. is a significant aspect of how low they can go. tom: this is important. this is the switch in the last three weeks we have seen with cash not being a residual to a portfolio, but cash as being
something you manage. here is the first rate of the weekend. at bloomberg and at bloomberg news, simon kennedy out of hong a highd andrea wong, hurdle. bill gross, michael harton with interesting thoughts of a reverse plaza accord. bill gross, do you need to attend a plaza accord in the next 20 months or so? can mike and i have lunch with you at the plaza hotel? bill: i would love to have lunch with you guys. i am not sure you would like to have lunch with me. i am too commonsensical and they depend on models and statistical data that goes back 30 or 40 years in the old financial economy and what you could earn an appropriate rate of return on your capital. it is difficult these days when the rules can change. perhaps you can represent me at the plaza. fromel: i can tell you
government officials from the u.s., there is no plaza. tom: the fact is my people are talking about it. i listened to your piece on robert gordon. can i make a comment? obviously, productivity has come down and that is part of real growth. one of the things of the fed and fiscal policy is trying to 2.3%late to get us back to real rate of growth. i think, and there have been a lot of papers in the last 10 years that supported, part of the high productivity of the ant 20 or 30 years, this is gordon's and it was absent from this book. part of a reason why we have productivity at those levels was the productivity of finance. think about credit cards, buying a car on loan. a mortgage. all of this facilitated the growth of the real economy.
more cars, more conception, more -- more consumption. when you get interest rates down to these levels, productivity of finance diminishes or is absent. some estimates have suggested that activity of estimates finished .5% to 1% over a long period of time. now with that absence, that is one reason while bureau growth can't go any -- why real growth can go higher and muska lower. six --r least sophisticated listener and viewer knows we are in an unorthodox territory. none of this is in the textbooks are in the mailroom at pimco a million years ago. with that said, what is your portfolio, your unconstrained strategy to adapt in this on, -- odd, low yield environment? bill: the me say this. if central banks are true to their word and are gradual and
one direction or another depending on how the economy goes, and we know there are shocks, taper tantrums, and etc. are german sinkholes, , say they are true to their word and interest rates move gradually. what you want to do is not accept the .7% from a two-year but sell volatility around it. pretend the two-year in the next month or two can go higher than .9% or lower than .5%. when you do that, you camesa they take a .7% two-year and turn into a 3% two-year. does that come without risk? no, it doesn't. it allows an investor to earn more on what is a guaranteed security with a little volatility by essence, selling it. stephanie: that was our own tom keene and michael mckee on bloomberg radio with janus capital bill gross. for me, the takeaway was bill
dealing how long-term real wages are suffering. as he said, "the underemployment rate did not change and there are a lot of people underemployed." that is a negative aspect. there are people out there not making the wages they need to boost this economy forward. emily: they are working part-time or they are not looking for jobs. stephanie: or they don't have the skills for the jobs that are available. we are going to take a break. more on jobs and the market and is am i just told me, don't forget me -- the ceo of vanguard, we'll him $10. you know the number was 151,000. we will be back, you're watching go.
my partner david westin is out. my other partner, matt miller, filling in. with us for the hour. the one and only dwight anderson. of a commodity focused hedge fund and i will say a global citizen. we have a lot to cover. first, let's give you some first word news. matt: the labor market cooled off a bit last month. fell to 4.9%.e its lowest in almost eight years. much more on the report just ahead. reports from syria say government troops are close to a victory that could tip the civil war in her favor. his forces have nearly surrounded the countries largest route toey supply rebels there have been cut and refugees are fleeing into turkey. also, the explosive force of a volcano captured on video. the abruption happened overnight in southern japan. that country has more than 100 volcano's. global news 24 hours a day
powered by 130 bureaus around the world. let senator giuliani markets. there has been a lot of bouncing around in reaction as investors tried to figure out what to make of it. right now, futures are trading lower. that is where they settled at a half now after the data. i want to look at the chart of the s&p futures to get more of an idea of the gyrations that we saw in the wake of the number coming out. with the headline payrolls number coming out worse than estimated, it seems as though that is what equity investors or traders at the very least maybe focusing on as we saw a drop following it, a little bouncing around. again, a settling lower, if you will. if you look in the rates market and what we saw in the 10 year, that gives you an idea that perhaps this is a more positive view on the report. it is a little mixed in terms of how it is being read across the spectrum. investors are also looking at
the average hourly earnings going up more than estimated. we are actually seeing a yield on the 10 year ago up a .7%. in the currency market, we had seen a four-day losing streak for the u.s. dollar. it looks like we are now breaking that as the euro goes lower. that means the dollar goes higher versus the euro. i want to look at the yen as well. the reaction had not been quite as clear. if you look at the japanese yen, we have been seeing less dramatic reaction. do we have the yen? we will take a look at that later. there is the end. the dollar is rising against the yen. not as much as on a percentage basis. finally, oil prices, i wanted to check on those, as well. oil prices heading lower, also. it is interesting that it depends on the class you're looking out. there seems to be different interpretations as to whether this data is positive. >> some real disconnect. you wouldn't expect to sell
bonds and equities. stephanie: it is that 1-1 and has is confused. let's try to get less confused. will break down markets now. i will give you number one. obviously, the january jobs number that just crossed 30 minutes ago. the jobless rate fell to 4.0% and payrolls in the u.s. rose 151,000. let's take you down to the labor department where brendan greeley is standing by. break it down for us. that was lower than the estimates and was below the estimates of everyone in that room on that set. here is what i will say. it is a nice, reasonable jobs number that you can take on to mom your it it is still above the three month number for job gain. it is right at what economists would estimate is the replacement rate. in some ways, it is vindication for janet yellen. she has been saying for a long time she wanted to run the economy hot which she did despite that hike in december. this is what things started look like when you start to run things a little hot.
stephanie: what do you make of this? if you are janet yellen, how do you read this number? >> this is not the number i would want if i was janet yellen. the number came in below expectations. individual components are a bit better. average annual earnings are relatively strong, but you are not sure if that is due to hikes and minimum wage, manufacturing jobs that are a bit better than expected. or do to wonder whether. i think this is tough for them. really tough if you are an equity trader alan like to figure out -- we heard going into market watchers that bad news would be good news. if we get low market numbers, that means the fed will hold off -- i wouldn't say hawkish, they are not hawkish, hold off on rate increases and then the market would like that. the market doesn't seem to love this. >> i think it is the uncertainty. do, 150,know what to you know what appeared a mixed number like this, i think it creates the maximum uncertainty.
more investors are sitting in more cash today than ever. this only exacerbates that? >> it will for the sort the short-term, yes. >> janet yellen is no to do. this number doesn't help her make a decision. how important is it, really, what the fed does? longer term for investing does 2-3 basis points, 30 basis points, 25 basis points make a huge difference? a knock on effect and what that means. when you have so much of the world is aggressively easing currencies against us, japan, europe, china, etc., in the short term, you are exacerbating the problem for emerging markets. very weak demand from their demand driver which is china. their funding source, the dollar, is more and more expensive. you have just raise the probability on the margin according to the market of increment a hikes. it probably makes the dollar strengthened after it sold off. i think on the margin that that
is worst. brendan: the problem with his number is is not a bad number, but it doesn't give a clear sign to the fed one way or another. there is some improvement in wages, in hours, but it is not extra nerd. this -- it is not a bad enough number that endlessly fetes send a clear signal, not in march, maybe not in june, it is not a good enough number that allows them to send the signal the other way. there is some hope there. that if you keep the unemployment rate low enough, for long enough, you are going to see some gain in those. we are finally starting to see those. in a way, there is a hope for economists that their model of the economy does work as we have always imagined it does. stephanie: manufacturing is what matters to you most. what do you read it? everything that we are getting -- matt: with the snow, right?
dwight: manufacturing is more elsewhere, they were affected earlier in the month. everything we are getting from domestic manufacturers is competition, pressure, market pressure, import pressure, and so to have it actually be marginally better than expected was a surprise to me. you brought up currencies, that is our number two story for you. the dollar, even with today's rally, heading for its biggest weekly decline since 2009. u.s. currency, it is up today at little bit after falling against a group of 10 peers as expectations say for another rate hike. say, this does not push it in either direction. we were already out, according to futures, no rate hike until december or maybe even january of 2017. what do you make of one rate hike this year? what a movie dollar at all or is that already built in?
corrects i don't think it was is built in coming in. before i came out here, the odds a move 6% probability of increased to 55. people are certain to price it in. you should get correlated dollars from that. people are moving from -- they are not going to raise most likely to the -- ok, maybe more likely they are going to raise. matt: the odds an increase in january of 2017? we finally have 50.3% according to w.a.r. p lebanon until december -- but not until december. it is the very end of the year. tyson foods is up around 7% today in early trading after the company reported fourth-quarter earnings. it raised its full-year profit forecast after a decline in the cost of feed and animals. let's talk about how commodity prices, i am guessing, that has to be what is boosting this company.
white: to give credit where credit is due, management has outperformed our expectation. aree their raw materials down, most of the things that they sell, the prices are down. haveake a look at how they beat the industry on the margins for chicken, outperformed everyone in pork and beef, and two other tailwinds, doing well in prepared foods and the synergy from the hellish our firm's acquisition. it is much more company and management than the actual headwinds or tailwinds. terms of feed cost, we have seen a drop. the question is because we don't have check in on this chart, there are a lot of different ways to price chicken parts, but you're looking at corn and soybeans. matt: you don't have corn in yellow. i would put soybeans and white and corn and yellow. stephanie: stop critiquing.
if you are already positioned well with good management, etc., this could be an additional boon to you as long as the price of your end product is also not fall into quickly. >> the company has lowered its sales forecast so it is not as if we are blowing it out of the water. dwight: they took it down because sales prices are down. chicken prices fell more than grains did last year. you actually took, for commodities, negative in the fourth quarter. it ine company to sort part because they got to hire and in contrast, really, it is a compliment to them and what they have done to the business. matt: i and trying to look at the geographic breakdown. how much does tyson get out of the u.s.? dwight: they have material revenues and him and trying to improve a struggling business in china. their exports and exports of chicken have fallen due to the strength of the dollar and illnesses we had with poultry.
the exports have come down much more. now, they would overcome it by overcoming domestic earnings. have managed to pull it up. if you see my screen, you can see earnings outside of the u.s. are much lower. they are growing a little bit. obviously, this is an important protein for a lot of the massive countries around the world. i don't think that will be the story for them. with the devaluation in brazil. poetry and chicken. they have become lower cost. you have really high quality companies there. with some of their customers downstream in the higher end like prepared food, they will grow, but generically, it is a domestic story. guess -- stephanie: mats in such a fully everyday. matt: kearny to us. -- carnitas. stephanie: mats eats at chipotle
everyday. we are 20 minutes away from the market open and -- matt: we are seeing jobs in futures, but they are not a huge move. a 25 point drop. a five point drop on s&p futures. we weren't very high up before the numbers. >> it speaks to the effect that a jobs number didn't tell us much to the right or left. we are sitting in this malaise. we are taking a break and when we come back, we look at the free market movers. -- pre-market movers.
bloomberg the latest business flash. america's trade deficit rose 2.7% in december. u.s. exports fell for a third straight month. exports fell 4.8 percent last year. that was the first decline since the recession in 2009. meantime, the controversy about rests for truck drivers is back in congress. it would overlap -- override laws and 22 states that would require more breaks than the federal standard, a measure which is backed by the trucking industry was dropped in december. volkswagen is delaying its annual results and shareholders meeting because of the omissions scandal. the automaker plans to publish its own findings about the controversy later in april. that is the latest bloomberg business flash. premarketlook at the movers, you have to look at linkedin which is losing a third of its value this morning after the company forecast a slower revenue growth this year because of signs of weakness in advertising and marketing tools. revenue is going to be about
$820 million in the first quarter. analysts were looking for $857 million. one analyst told us in this market, there is no mercy. , an if you look at this drop big one, which honestly, it is, if you look at the longer-term history of the company shares, they are actually holding up relatively well versus, say, some of the other technology ipos. this goes all the way back to the company's ipo in may of 2011. that ipo price was $45 a share. ,ven with that 34% drop today 125 is still right around here. yes, it goes back to the lowest since about 2013. unlike, again, some of the internet stocks, not quite the same performance. if you look at other internet stocks, they are getting down -- getting dragged down by linkedin, even if they are not in the same business. facebook, netflix, and twitter have been showing weakness. i also want to look at hanes
brands, the clothing manufacturer. the company's fourth-quarter revenue coming in below estimates, to's -- 2016 sales could miss estimates. we are seeing some analysts come in this mine from oppenheimer and green capital saying you may want to buy on weakness, the weakness here was due potentially to seasonality. finally, jen work is suspending sales of traditional life insurance and fixed annuity products to better focus on stabilizing the units that do long-term care coverage. those shares also tumbling 21%. coming up next, more trouble could be ahead for already struggling oil companies. we will discuss president obama's new oil packed next.
♪ oil is trading down today. beyond prices, oil companies could have another major problem on their hands. tosident obama is planning propose a $10 per barrel tax on oil on the fiscal 2017 budget in next week. according to the white house, it is meant to create more incentive for right at sector innovation and reduce our reliance on oil. they stress that the cost would fall on the oil company spirit let's see what dwight anderson things about all of this. the way alan krueger explained it to make, it is very different. the cost would fall on consumers and would work out to a per gallon gas tax which the federal gas tax has been raised since the 1980's. the white: -- apply it to u.s. oil cummings, he raises our -- companies, it raises
our relative prices. it is a nonstarter. the budget he is proposing is a political document and not an economic document. to propose a $10 tax at this point in the cycle is a nonstarter. matt: i live in ohio. when i go home, i fill up my truck, it is $1.61 a gallon. we could afford to pay a lot more for gasoline in this country, especially considering what other countries pay. our infrastructure is crumbling. we need money to fix it. the highway fund has gone through problem after problem in washington. if the tax was on the gallon at the consumer level, ideal? dwight: i think it is worth. people talk about income stratification. this is a regressive tax or you put a tax on gasoline, you will affect the poorest people in my
spirit one of the better things has been the relief on energy and fuel prices. it has been one of the things that has kept the economy as mediocre but ok as it has been. you then come back and put this in, you are further hurting the poor to middle-class. it should be exactly anathema of what you are trying to accompany. stephanie: sounds like quantitative easing. the drop wegue that have seen in oil prices has benefited to consumer more than a has, say, corporations. looking at here is the oil price in orange which we know has collapsed. here is the transportation index. on a percentage basis, it has not fallen as much. julie: transportation stocks have not performed well. that may not be what you imagine in a falling oil prices environment. some other reason of that is because consumers have tried to take advantage of the drop in fuel costs more than corporations. this is number of miles driven which has been trending up a little bit more.
individual consumers driving more. perhaps they are capturing that drop here at. matt: you complete automaker stocks up there and it would look like a horrible chart even though oil prices have fallen and it has sold more cars. julie: in other words, they drop in oil prices has not created the benefit. if you layer this tax on top of it. ight: they were helped on a pure cost, but a huge amount of what they carry is tied to the oil industry. the most expensive way to carry oil any long-distance is r ail. once you had reduction fall, you had less on rail. people started becoming more efficient. you look at:, iron ore, all of the heavy stuff has come off of that. you have lost a ton of myles jack costs are down. on the revenue side, something else took a hit. stephanie: matt and i sat with
him yesterday. right now, i don't have a position. i am just sitting here, waiting for the opportunity to come back into this oil market. stephanie: back that up for us. you are sitting predominantly in cash with us right now? boone: yes. stephanie: boone pickens to hezbollah up on oil is sitting in cash. he things we will have a recovery before we move back up. wight: it depends on what your duration is. he has always tried to do a good timing his entry. when we spoke in october, i said 6-9 months before you hit peak inventories. you are sitting here and it you were looking over the next three months, the fiscal balance sheet of crude looks weak. the fiscal market is weak, it is a seasonal downturn for refiners good i understand why you be sitting and thinking let's wait
two months, three months. if you or someone looking at nine or 10 months at the end of this year, by that point, actual declines for the u.s. and elsewhere in the world are in a surprise, the world will be balanced and chewing through that oil inventory and it will be a different price environment. stephanie: how are you positioned? dwight: individual curve traits that we could add on allow us to play both portions of the curve. only 100,000 barrels come out every day last year. a supply dropped by 1.1%. -- .1%. continued to decline. at one point do we see enough oil come out of production at inventories actually start to fall and the supply-demand pushes price back up? dwight: two different things drop supply. one is to people actually have to shut in crude production is prices are too low? crude last year was $52. not a prophet, but not cash flow negative good one to get down your $30, every dollar down, if
you stay there six weeks, use lose another barrel for people shut in. that is different than the median term effect of decline. can -- thestry that kleins 5-30% depending on the oil well, you have to put that money in. debt, cash flow, credit market cash to do that. the thing about the nine-month is the refinery catches up. decline rate matters more than shot in. stephanie: we are taking a quick rate. when we come back, labor secretary thomas perez.
watching this morning, linkedin. 30% intumbled as much as extended trading. that is a big number, almost a third of their volume. this came after the networking site forecasted slower revenue growth. trading moments ago. bloomberg editor at large cory johnson joins us live. dwight anderson, not necessarily an avid linkedin user is still with us. what is the deal? >> business is not growing like it was. it was an interesting conference call. they haven't talking about last year, launching products, changing or the mobile apps are different product and they were years ago. -- months ago. the report was good. growth of nearly 5%. the best they have had any while. you saw in the guide, a prediction of a lot of high
expenses and a lot of difficulty selling ads. you have had slowing revenue growth. the bart chart is revenue growth. yet, people by and large have still been buying shares. you had ups and downs. back to the big bang of 2015. you have had ups and downs. overall, the stock price has still managed to go up over the past few years, even as that revenue growth has plunged. thananie: 35% is more just, they have two jews of that model. i am not saying they are in a gopro crisis to tuition, but you need a turnaround. : it is fundamentally a very strong business p are they had done a bunch of acquisitions. with all of that depreciation, you don't see cash profits on the income statement. the business is doing quite well. a getting more revenue for every user. it is a question of that growth and pace of that growth.
getting people to use linkedin every day. that is the challenge for them. not to have people when they are hiring go on when they're looking for a job, but you have users every day, so people everyday to try to understand who they are meeting when the going to a meeting. socialie: a professional media outlook. what one uses for facebook, they should use for linkedin. stephanie: when you went with the losers like us, i was so panicked. matt: we use twitter all the time professionally. you use facebook. are you willing to person -- a linkedin person? julie stephanie: i'm not. i had a job. human resources recruiting, the enterprise is massive. it is good about turning those monthly uses into daily uses. they are spending a lot to get there.
spending is the thing that has wall street upset. a look at profits that are further out. talkinge: we are linkedin. you are a san francisco guy. the super bowl. this is a test for twitter. twitter is another name that has had a beat down. all eyes are on twitter as far as super bowl ads, the kind of engagement we will see there. if it is not a success, what can we see in the forecast for monday? htag has will city. the advertisers want to get more out of them. they want to start a conversation. they want someone sucked into something that they will continue online. you will see twitter used a lot. seef twitter wins, we could traditional tv, the traditional ad model get cracked yet again. $5 million for 30 seconds? cory johnson, thank you, my friend. we have to turn back to the jobs report.
matt: the jobless rate fell down to 4.9% in january, the lowest level since before president obama was elected president. we are now in joined by our labor secretary from the labor department. esther secretary, thank you for joining us. a bit of a disappointment if you look at the actual number, but the unemployment rate falls down to 4.9%. is that as important as the 151? >> this is a solid report. as you note, this is the first time in the obama and ministers we had been under 5%. you look at growth in important sectors like construction and manufacturing, as you get closer to the summits, the mountain of recovery, the steps in terms of quantity of jobs tends to get a little smaller. they are accompanied by real wage growth. this has been the best six months for real wage growth since the beginning of recovery. this is really, i think, it has
the hallmarks right now of a mature recovery. we have a lot more work to do. there is still slack in the labor market, but this is a solid report. matt: published as the raising of minimum wage in january affect the wage growth number? >> that is a factor. goldman sachs issued a report talking about the fact that minimum-wage hikes help wage growth. obviously, a lot of other factors do, that minimum-wage does, as well. over 4 million people got a raise this january as a result of the state and local action. we need to act federally. there has been a proposal on the table for some time. minimum-wage has always been a bipartisan issue. overy president accepts tw since fdr's have signed an increase in the minimum wage. we are going to continue to fight for that because people 7.25 dollars an hour are living in poverty.
we are subsidizing the low-wage business model of so many employers who pay below this unfair wage and then people have to rely on food stamps to feed their family. we need to get rid of that corporate welfare. if you look at the jolts data, we can see that openings have a collapsed hirings. that would suggest that american businesses are looking for -- to build -- to fill positions that american workers cannot fill. they are not qualified. what do you think about the theory? the most frequent conversation i have with employers is i am bullish about the future. i want to grow my business, and one of my biggest challenges is i need to make sure that would be workers coming through my door have the skills to compete. --t is why we have sent spent so much time at the department of labor loving the modern skill superhighway of the 21st century. we have a tech higher initiative where we are working with cities
, businesses, across this country to address the fact that roughly half a million jobs right now open in the i.t. field, only a fraction require a college degree or above. is there arens opportunities abound. that is why, for instance, in this most recent budget, we got 90 million additional dollars for partnership. is a great opportunity for us to take to earn while you learn model. in the states, it has been mostly limited in the skilled trade. now, we are talking about i.t. apprenticeships. health care apprenticeships. day, one of my colleagues at the department of labor was a zurich insurance in chicago. they have started, with our says -- assistance, and apprenticeship program for claims adjusters. that learn while you earn model is tried and tested and a great way to help employers get the
skilled workforce they need and to help workers punch their ticket to the middle class. we have a lot of work to do in building that superhighway, but we have made a tremendous amount of progress under this president. matt: i know the president was concerned that for most of his 10 year, the first look was never as good as actually was. that seems to maybe have turned around. do you expect this year to be lower as policy -- as far as the actual number? thomas: we will wait and see. i am always reluctant to be crystal ball. i look at where we are now, the break even point on jobs is about 75, 80,000 jobs a month. that is what we need to simply sustain population growth. we are still, even in a month that did not meet the expectations of some, where over twice that amount in private sector drop growth. this is solid.
to me, what is really important for listeners is that not only do we have solid job growth, we are seeing evidence of wage growth. the last six months being the best six months since the beginning of recovery. i have talked to so many people across this country working 40, 50 hours, they haven't had a meaningful raise in years. now, we are beginning to see evidence of that. again, that tells me we are getting closer to the summit of this mountain of economic recovery. that is when you start to see that wage pressure. matt: tom perez joining us from washington. julie: investors are reading this report negatively. wasdon's interpretation most pertinent. there wasn't enough in the report to give us a clear picture because there was some good and some bad. that leaves uncertainty about where the fed is going to go next. all three major avenues are lower. thedow losing the least of
three. if you look at bloomberg, a picture on my imap of which groups are on the move. energy shares pulling back the most as we see energy prices continue to fall. utilities are lower as yields go higher. discretionary stocks, technology kicking up her financials are holding up well, perhaps, again as stocks are higher. but look at the 10 year. even though, on a relative basis, it is a low-level, 1.8 8%, we are seeing an uptick in yields in the wake of this. emphasizing that idea that there are different interpretations of this data depending on what asset class you are looking at. look at the dollar versus some of the other currency. the dollar rising versus the yen. we are seeing the euro and the pound fall versus the euro. strengthening, metering begin we see in yield. in terms of stock, one mover i want to point out in particular. we have been watching the big cap oil stocks.
another one of the companies coming out with a loss and talking about raising cash in the wake of this big drop in oil prices. losses, $1.82 billion. the company will raise $1.83 billion from the sale of common depositary shares. when you have that that eludes share value for existing stockholders, you see stocks fall. there is also this idea, as you solid conical yesterday, some of these oil companies are taking dramatic measures in order to raise cash in a tough environment for them. to stay oni want this. this is a big name free. how do you take this news? >> it is expected amongst a group of companies. the credit market is either closed for a number of these companies, or it is too expensive. the fed is doing a proactive job of being all over the banks, what is your energy exposure, are you using a low enough price , how quickly will you cut your credit lines to them? that is forcing these companies
to act early that still had time with the payments. hess is one. whether it is a new field, and marathon, there is a basket of companies who all have a chance of equity issuance because that size is either too expensive or both. stephanie: are these companies turn to draw their lunch from the banks and they can't? you are coming up to re-determinations. thehe next three months, price deck will be cut drastically and the dollar, the credit will be cut drastically. the good part of that, that is crudee medium outlook for is good. no debt, no capital. you need crappy though -- capital in crude to maintain direction every day. you will see a much longer fall in crude by the end of this year in terms of crude production for the u.s., in part because of the fall of access. they are acting proactively. it is too bad they used to many other shares responding to half
-- activists really responding to perk -- purchase shares. they are being conservative because they love funding gap all the way through the next two years. if only a european regulator was looking at their banks in the same way. we will continue talking about this, but right now, we want to go down to abigail doolittle who has the live on some -- have: shares of the world's largest cyber security software maker are searching for a few reasons. first, the company will receive a $500 million investment from well-regarded private equity firm silver lake. second, management will be returning comedy company will review -- will be returning $5.5 million to shareholders from a recent sale of the storage unit. they radiate. -- rewritten -- reiterated guidance. they have struggled over the last couple of years. levels are blessings is 2008. a very wide, volatile trading range. the question may be whether or
toyota is raising its earning forecast and is on track to set a were record profit for companies lexus and rav4 suv sales are now soaring. analysts forecast profit for the year to meet -- to reach $26 million. also, could the world's two biggest way companies become permanent play weights -- playmates? hasbro approached mattel about a merger and talks up and held sporadically ever since. such a deal could run into opposition from regulators. a majority owner of the chicago sun-times now has a 17% stake in its rival. -- criticsia credit as a merger of the papers are notable. they already share liberty services. that is the latest bloomberg business flash. give you: we need to something quite serious that is happening here in new york city. a crane has collapsed. earlier this morning, the fdny two one person is dead and others are seriously injured.
the accident happened about an hour ago. we don't know more than that at this point. that is my old neighborhood. -- justthe middle of above where the financial district is. i'm not 100% sure, but this is where it appears. clearly, we will be monitoring this throughout the hour, as i said. ,ne person is officially dead two injured. we have to get back to these markets. we were talking earlier about the oil market. clearly, they have been volatile. volatility has been affecting other commodities. sugar and cocoa. we have seen spikes in volatility, the most in the last five years. help us break this down. let's start with sugar. >> sugar have been a commodity for a number of years. south africa, philippines, india, their sugar crops have been affected. in brazil, the largest producer
and exporter of sugar, they have a choice when they produce sugarcane and other fields of making ethanol or sugar. you had exploding demand of ethanol because it is a cheaper fuel and have been going to recession. record sales which have cut the amount of sugar they produce. we've actually turned this year and next year into deficits for sugar. you have accumulated inventory. it is not explosive yet, but a market deficit needs to rise from here in order to balance rate price to get enough sugar produced, not ethanol. stephanie: how about argentina? >> it doesn't affect sugar as much. it is much more in terms of grain. that is actually medium-term negative. for a long time, they artificially kept their currency to strong. added taxes, export controls, quarters on corn and wheat. what should be amongst the lowest cost producer wasn't. they had their acreage fall. you will see a material increase in acres planted.
if you have any sort of normal weather, an increase in soybean production. one of the stocks we spoke about last time, a great way to play at which we have been involved in,? aggro. our continued exposure in sugar. that is something to add leverage to both sides. there are a number of other sugar producers. some of them have been dragged down over concerns of brazil. we are eight it short fan. at the end, he says he wants to invest in water. recently, he has been saying the best way to play that is through food. do you agree? : that has been a recurrent theme since the 70's, the paris club, t boone made a huge play on water. one of the things people continue to underestimate is how amazingly productive and resourceful the average farmer is. we grow production per acre per year. it is something, i think, a good store of volume -- a good inflation shock. as a way to grow your wealth, it
is not something i think which is priced for that today. you are bullish the last time on diamond where are you now? pricingdiamond shouldn't strengthen because you have to work inventories through the channel this year. the companies were so cheap that some of the dominion diamond corporation like we spoke about are marginally up versus when we spoke last time. they continue to really like it over the next few years. to stick with commodities. cocoa volatility, unprecedented levels. dwight: we are expecting a big demand boost. her husband andy is going to buy her chocolate. stephanie: it is valentine's day. dwight: both cocoa and sugar will be consumed by that. that is my demands shock. cocoa production has struggled. it has been affected by the
weather. -- had stephanie: a bigger problem than sugar? the same amount of accumulated inventory. the issue that you have between the two of them is you had this is a relatively popular trade. commodities,n liquidating their position, creating an opportunity today. stephanie: we have to take a break. sugar, cocoa, oil. diamond. around the horn with white anderson. -- with dwight anderson. when we come back, a look at the conversations next on bloomberg go.
we have now paused and are working on the reverse spin as well as exploring other strategic alternatives. we believe that dovetails well with our strategic -- that is about building the most value and recognizing the most that we possibly can. be 50, $60 aing to barrel by the end of the year because you shut down rakes -- rigs all over the world. you are down in the united states for oil drilling rakes that have come down from $16 16 $.09. >> it is going global. whether that is asia, india, europe, you find more and more people following the league and being a part and attached to it. i know adam silvers has done a great job of catering, a lot of things we do in the states make it more appealing to the worldwide audience. -- greatercoming basketball fans all around the world.
>> the deceptive nature of the unemployment rate, i think, is the problem. it speaks to a smaller and smaller portion of the labor force. i think, unfortunately, because the fat it uses that rate -- the fed uses that to forecast interest rate policy, they are focusing on the wrong thing. stephanie: a quick final thought from dwight anderson. from your perspective, in the commodities world, what do you most want to do? : i want to be patient. the commodity selloff market started april 11. stephanie: there you go. he wants to be patient. we can't be. we are going to wrap it up. that does it for the week. adios on bloomberg go.
>> good morning. i'm david gora. vonnie: i'm vonnie quinn. the jobless rate fell to a nearly eight-year low. >> signs of wage growth something that has been noticeably absent. how we growth has played into the race for the white house in 2016. vonnie: linkedin getting crushed this morning. before cassidy year of slower revenue growth. to the markets desk. >> with the disappointment and headline numbers, the jobless rate fell, we saw that uptick in