tv Bloomberg Go Bloomberg November 4, 2016 7:00am-10:01am EDT
the markets in focus, an eight-day losing streak on the s&p 500. switch up the board. the bond market, treasuries weak. yields down by two basis points to 179. a cable rate at 1.2475. alix: the october jobs report out in just 90 minutes, dropping four days before the election. economists are forecasting jobs to be created last month. 8:30 a.m., that data drops. and heading into the final weekend of the presidential race, it may all come down to just a few states. according to analysis from bloomberg politics, donald trump is showing strength in ohio and iowa, while hillary clinton's advantage in early voting looks stronger in north carolina and nevada. and that election uncertainty playing out today in markets. s&p 500 having its longest losing streak since the financial crisis in 2008, while crude holds near one-month lows
as investors flee risky assets. and that's what you need to know. david: this is jobs day in the united states. for more on the jobs number that's coming out, we're going to the chief u.s. economist for bloomberg television. carl, to put it into a broader perspective, 12-month average, 204,000 jobs added a month. six months, 169,000. what are you expecting this month? carl: given what we have seen in the g.d.p. numbers that she the economy is at least to some degree reaccelerating in half of the year, that should augur for at least a mild pickup in the pace of hiring. i think we can do a little better than the six-month average of roughly 170 and go to something closer to 190,000. david: so somewhere in between? carl: exactly. i hate to say boring report, but that's what we're gearing towards f. there's a big outside myth to the down side, you know, the real question is going to have to be if this is not similar to what alix was highlighting, election uncertainty and potentially
some hesitancy to expand your most expensive asset for most employers, which is their workforce. david: besides the top line number, people always want to know about wage growth, whether we're really starting to pull employment. what are you expecting there? carl: absolutely. we're probably holding off at 2.6% for average hourly earnings. however, there's a mild acceleration underway. we got to a 5% unemployment rate, and we seem to be stuck in that band, just hovering around it. at the same time that we got there, we started to see wage pressures at least be at the top end of their range, and these are all signals to the fed that we're very close to full employment. alix: full employment brings touts other key number, which is a labor force participation rate. had a huge boom, up almost 2% in the last 12 months. does that continue? what does it mean for slack? carl: it's still extremely low, even though it's started to turn the corner. what i think is happening here, a lot of economists will tell
you you can't forecast labor force participation, because i think there's this big structural component to it. economists like janet yellen think there's a significant cyclical component to it, and i tend to agree with her. a stronger economy draws workers in from the sidelines and boosts labor force participation. so i think that this has further room to run as long as the fed doesn't get in its way, and the fed has signalled that it is not going to get in the way if they're pursuing the high pressure, running hot economy that so many fed speakers have hinted at. alix: an hour and a half to go. thanks so much, carl, for more on the u.s. jobs report, we're joined by deutsche bank's chief international economist and managing director. the twitter whisper number is like 220,000. what's your call for today? >> we have 150, not too far away from the consensus. but as carl just mentioned, the economy is look better on the g.d.p. numbers more recently. if you look at the broader picture, jobless claims, job openings, it does look like the
economy is coming back after the negative shock from oil prices falling and the dollar going up. we are still expecting chugging along and the economy doing relatively ok for now. jonathan: i want to pick up on something carl mentioned and reflect on a speech that janet yellen delivered back in march 2014. she mentioned the word slack 21 times in that speech and talked about how the fed had more work to do and picked out various elements as to why. one of those elements, participation rate. it's 63%. where are we now? 62.9%. yellen said the fed had more work to do. have they missed the goal here the last three years? >> i think they have. in some sense, she still talks about a high-pressure economy, and now trying, as carl just said, trying to get people back into the labor force. in some sense, that does give a good idea about what they're thinking. but at the same time, if we are going to run a high-pressure economy, then that would also imply we should have some
inflation, and that's why inflation at the moment is 1.7. the goal is 2. is 1.7? this is a really important question for every rate investor, equity investor, and f.x. investor. alix: we actually flashed a chart, talking about labor force participation rate for millennials. tell us what you're seeing there and how much more could come back. >> this is a very important development. we had a decline in participation rate for the millennials, and we're now, for the last one or two years, we're now in a situation where that's actually going up. the good news is the millennials, when the crisis hit, they had to start longer. they're now coming back out of university and studying, and that means they are finding jobs. the constant, steady job growth here does suggest the economy is doing relatively ok, and it is also move in the right direction. david: is there potentially a problem with the model? if you asked janet yellen in 2014 when they gave that speech that jonathan just referred to, that we're going to add jobs,
200,000 a month, for this extended period of time, and still be at 92.9 percent -- and still be at 62.9%, they would have said that's impossible. what changed? >> the fed used to say, when we hit a threshold of 6.5, then we'll start to think about hiking rates. now we're at 5, we are far below that number, and they're barely thinking about hiking rates. absolutely, i think the fed is also surprised that we did not see inflation sooner as the speech john was mentioning. jonathan: some further evidence is what we're told they need see. what do they need to see they don't see now, between now and december to hike rates? >> that's, of course, completely unclear, and that leaves a lot of guessing in financial markets. i can tell you equity investors come up with one answer, and rate investors come one another answer. it's not very helpful to say some further evidence. but i think it is a cryptic, secret language for saying we need to see continued job growth in the numbers today of 150 to 200,000. we need see continued wages and
inflation, and if we are not seeing a dramatic breakdown in data, we are going to go in december. i think that really is what they're trying to tell us. jonathan: deutsche bank chief international economist and managing director. let's get an update outside the world of business. >> john, four days to go before the presidential election. both candidates campaigned in one of the battleground states, north carolina. hillary clinton took the stage with her primary rival, bernie sanders. she said that donald trump's temperament and comments about women and minorities make him unfit to be president. meanwhile, trump appeared with veterans and said he couldn't imagine clinton as commander in chief. nationwide polls show the race is tightening. still trump's path to winning enough votes appears to be harder. u.s. prosecutors taking aim at generic drug makers in a criminal investigation into suspected price fixing. according to people familiar with the matter, the probe began about two years ago and involved more than a dozen companies. some criminal charges could be
filed by the end of the year. police in turkey have extended their crackdown. they've rounded up a number of kurdish lawmakers in late-night raids. the president is consolidating his power in the wake that have failed coup in july. he persuaded parliament to pass a law that allows members of the kurdish people's democratic party to be charged with terrorism offenses. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries, i'm taylor riggs. this is bloomberg. alix? alix: you have a global selloff underway. u.s. equity futures flat into the jobs number. let's look at some of the movers in europe. the best performer, the best point gainer in the stoxx 600, l'oreal up by 3%. revenue beat analyst estimates, also reiterated second-half sales to improve on last year. it's a different story when it comes to the drug stocks. you have the u.s. generic drug probe, and that's bringing down companies over in europe as well.
novartis off by 1%. hsbc says all generic companies are likely to be under suspicion, even though nor var advertise is not involved at present. it says the uncertainty is shoot now, ask questions later. and wrapping up, want to look at go pro. it's falling as much as 19%, at one point was down 25%. it issued a pretty bleak holiday forecast, lowered full-year sales forecast, citing intense competition. something similar what we saw. david: coming up -- election angst, the u.s. dollar on pace for its biggest weekly decline since august. trump's rise in the polls may be affecting currencies, but what does it mean for a fed rate snake we're now about 80 minutes away from the october jobs report. after a disappointing report last month, will we be back on pace set over the last six months? this is bloomberg. ♪
jonathan: from new york, this is bloomberg. let's check the markets on this payroll friday. it's an eight-day losing streak on the s&p 500. can we snap that? futures unchanged. on the dow, down by 17 points. a shaky session in you're, with the dax rolling over. switch up the board. we closed out last week on a 10-year at 1.85. we grind lower on yields throughout this week. we're down by two basis points on a 10-year in today's session. the cable rates, some sterling strength for a sixth straight day, the longest winning streak against the dollar since march of this year. and a little bit of dollar weakness. the dollar on pace for its biggest weekly decline since august. it's a closer presidential race, volatility across asset delass. what does it mean for the federal reserve in december? we'll talk to the managing
director still with us, and joining us around the table is r.b.c. capital markets' senior currency strategist. what does it mean in december? apparently it means a nick december. for me, if the market was really freaking out about next week, with the probability of a hike in december be at 80%? i would say no. what would you say? >> i think going into next week, lot of people are not necessarily freaking out, but just being a little bit more cautious. there's a fear of repeating a mistake. so rather than repricing everything, they're just lighting up on positioning, and that's what we're seeing. jonathan: you view the pickup in volatility, the one week implies the f.x. market, just capturing next week, just hedges going on, a little bit of risk aversion as opposed to anyone having any conviction about any outcome. >> exactly. it's a highly uncertain election. hillary clinton's chances are still around 65% to 70%, but donald trump has risen quite substantially in the last few weeks. i think gin the uncertainty,
given the experience of the referendum earlier this year, people are naturally quite cautious. david: it is quite striking, the difference between how fixed income has reacted. it's like calm, steady. what's the problem? >> we're hearing equities, complete panic. the v.i.x. going through the roof, all these fears about what sectors will be doing well, what rotation should i ready, how should i be prepared after tuesday, what might be coming. the uncertainty seems to be playing mainly into what's coming from the equity side and not at all from what's coming on the rate side. david: what explains that? certainly anyone would say it's more like that will donald trump will be president today than we thought it was a week ago. >> that is also a very good question. the correlation has really broken down compared to how it normally works. the fact that people are expected the hike, still even in the risk we are hearing, the stories we're telling each other don't fit with the stories we're seeing in fixed income. noip theory, if you have a trump presidency, that should be a huge fiscal stimulus. the bank of america front and
center with this, saying we're going to have a huge boost to gnd g.d.p., but that's not how the market interpret it is. >> it deponeds what's happens in congress. it's difficult to see them allowing a huge fiscal stimulus that's entirely unfund and had even more difficult to imagine them raising taxes to pay for it. i think it's important to bear in mind that for all the talk of fiscal stimulus, we might get a much more modest passage from either candidate. alix: it comes wednesday at 8:00 a.m., we're going to have the dollar rally that resumes, last week was a blip, take it away? >> if you consider how the fed has been reacting to any kind of sign of real risk, they really ratchet down the probability of a hike. so the fact that we're not seeing fed fund futures move as much, the fact that this is more concentrated in crowded positioning, that means to me it's much more likely just to be risking cautiousness heading into the election. jonathan: you sit around at the
table with deutsche bank. i just wonder how they refer back to the brexit scenario. you look at the cable, aggressive hedges taken out on the cable rate. then we saw the move to the f.x. market, big adjustment. saw the move in the market. in the months, things stabilized again. is that the playbook this time around if you do get a surprise outcome? >> with the brexit andmple comes up, people say i don't want to be caught off guard completely like i was doing brexit, so let me protect myself against what scenarios there might be, and this is playing out in the way that people are preparing themselves from an equity perspective. but also on the fiscal front, both candidates have said that they want more infrastructure investor, and as they said earlier, if there's more expansion come, maybe the fed needs to do less, so that means another -- the key word if more deprothe is coming, in this case, more government spending, maybe the fed will have hay rights faster, because we would see inflation faster. jonathan: in your world, that
should mean a stronger dollar on both sides of the equation, fiscal stimulus, stronger dollar. why do we see a weaker dollar? >> there's more than one thing to add, which is trump is talking about a deemed repatriation tax, and that could potentially be very dollar positive. the best example is homeland. the fact we've seen the dollar underperform this week again comes back to this idea that this is more about a lightening up of positioning heading into the election, heading into the uncertainty, rather than a positioning for a trump victory. david: let's get practical. next tuesday night, let's assume that donald trump is elected president. what does that mean for trading at r.b.c. capital? we saw it after brexit, lot of f.x. trading. what does it do for f.x. trading? what does it do for fixed income trading? >> typically we find when things are highly uncertain, we see a little bit less volume going through the market. we would depop see an increase in voluntarily at this time, particularly from the point of view of r.b.c., underperformance of the canadian dollar. that can be very important on
tuesday night. alix: what's the best hedge? >> a lot of people have put money in, but it's a pretty expensive hedge at the moment. i actually think this is a much cheaper hedge, potentially much better one for tuesday. alix: what's the best way to hedge the next few days? >> it's so difficult, because predicting the outcome is tough. protection is, generally speaking, probably a good idea, because we can either go up or down a lot, and it depends a lot on where exactly the election outcome goes. and the consider currency strategist. coming up -- the path to have a trump presidency, as the polls tighten with just four days left, we'll look at the states donald trump must win in order to control the white house. and later, we'll dig into the october payroll numbers with princeton professor and former chairman of the council of economic advisors, alan krueger. from new york on this payroll friday, one hour and about 11
david: this is bloomberg. last sunday, there was a headline connecting baseball with politics. the cubs have a smaller chance of winning than trump does. five short days later, the cubs are the world series champs, and the polls continue to tighten between hillary clinton and donald trump. real clear politics has the arrival of national polls showing only 1.5 points between the two candidates. we turn now to marty, our senior executive editor of international government to point our way forward to the election, only four days away. welcome back. we all know, we actually don't vote as a nation. we vote as individuals and states. take us forward into next tuesday. give us a guide. what should we be looking for as the night unfolds? marty: i think some early
indications in new hampshire, in virginia, in north carolina could tell a lot about how the ation sifts going to go. in new hampshire, it was a safe state for hillary clinton is now a battleground state, and they're both spending a number of days in new hampshire trying to take that race. and if donald trump is able to pull out new hampshire, if it's very tight in florida, and it looks like hillary clinton is ahead in north carolina, but they're both fighting for every vote there, it could be a key to what's going to happen later in the evening. of course, ohio is one of the most critical states, and that one is being hotly contested, as you know. david: why new hampshire? it's four electoral votes, for goodness sakes. why so concerned with four? marty: well, because of what it says about the electorate. i mean, it is a very diverse
state. it has been a state that does give you some insight into the votes of people around the country. while it's more symbolic than anything else, but it does give you an early in the evening clue as to what may be happening elsewhere. exit polls coming out of new hampshire will be incredibly closely watched. david: take us also into the demographics. the groups that really both camps are targeting right now. specifically talk about white, college educated voters, and their relationship with republicans on the one hand and nonwhite voters on the other. marty: well, it's very interesting. we had a story on blorg the other day that pointed out that hillary clinton is leading among white educated voters, and that will be the first time a democrat has taken that electoral group in something like 60 years. and on the other side, donald trump needs to do better in that group. meanwhile, hillary's support among black voters is strong, but the question there is turnout. that's why you see president
obama out on the stump every day playing to that group, telling them they must vote. nd indeed, that is the case. david: in the meantime, both are making their cases, including with other fellow travelers, such as, for example, our colleagues put together this string of songs. let's listen to what the candidates are saying on the stump. whaup a wonderful welcome here in pennsylvania. >> florida, we have five more days. >> in five days, we are going to win the great state of florida. >> love is something we need. she loves this country. and he knows how to get things done, not just talk. he certainly knows how to shake things up, doesn't he? >> this is a guy who spent 70 years, his whole life, born
with a silver spoon, showing no respect for working people. mr. trump: why isn't he back in the office? sometimes referred to as the oval office. why isn't he back in the white house bringing our jobs back? and helping our veterans. president obama: you even have a republican senator saying you cannot afford to give the nuclear codes to somebody so erratic. and as hillary points out, anybody that you can bait with a tweet is not someone you can trust with nuclear weapons. ms. clinton: someone who always puts himself first who doesn't care who gets hurt along the way, a president with a very thin skin who lashes out at anyone who challenges him, who praises adversaries like vladimir putin and picks fights with our allies and even attacked the pope. mr. trump: thank you very much, everybody. god bless you. god bless you. get out and vote.
david: yeah, god bless us everyone, as i think charles dickens said. the within thing i want your briefly to is ivanka trump, speaking in philadelphia, appealing to women. what role will women voters play? marty: women voters will play a critical role. to the extent hillary clinton is ahead in the polls, it's mainly because of that advantage. i'm not sure melania trump is a good representation for women, but she was quite effective. david: thanks so much, senior executive editor of international government and economics. ♪
month. that data out at 8:30 a.m. eastern. and heading spew the final week of the presidential race, it may all come down to just a few states. according to analysis from bloomberg politics, donald trump is showing strength in ohio and iowa. but hillary clinton's advantage in early voting looks stronger in north carolina and nevada. the election uncertainty playing out in markets. s&p 500 having its longest losing streak since the financial crisis in 200 . you got crude holding near a one-month low as investors flee risky assets. jonathan: thank you very much. this market is capturing the stories. the eight-day losing streak krk we snap that? maybe there's not much drama out there that's in the headline. futures at the moment unchanged. the ftse rolling over by 1.3%. some sterling strength again, switch up the board and look at this. six straight days of it. one pound, now at 1.2490, up by a quarter of 1% in today's session. that takes us nicely to today's
morning must read. pro-brexit newspapers in britain, as expected, have turned against the high court ruling that parliament rather than prime minister theresa may has the power to trigger article 50. the "daily tell depraff" went with the judges versus the people. daily mail said others are the enemy of the people. joining us now is simon kennedy. that captures the tone of some of the papers in the united kingdom today. talk me about the reality of the situation. how does prime minister may respond after yesterday? simon: first, it's an appeal to the supreme court. kind of like the american model that's been around for two centuries and soon a great deal of controversy. our highest court is seven years old and to date has captured the attention of many, but now it's in the prime sights of the media and lawmakers. december is the date for their hearing, and with a ruling like until early january.
then afterwards, it depends what they say. if they uphold the decision, it's into a parliament battle for theresa may. not many people see this as a chance to completely derail brexit, more a chance to model the plan that theresa may will take to europe. jonathan: ahead of the vote in june, the majority of m.p.'s in parliament were pro-e.u., but their constituencies voted in the past very different ways than the way they would have voted themselves. is there really going to be that much of a battle within parliament if they did take this to a vote next week? simon: there would be a battle, but not over whether to invoke article 50. they respect the decision of the referendum, where that might change, a few months, the economy has suddenly hit a downward spiral, maybe rethink that. but for the moment, the majority of parliamentarians are talking about upholding the referendum results, acting on
the will of the people, knowing if they didn't, they'd have to go back to their constituencies and explain themselves to some extent. if you break down the constituencies, of which there are about 650, the brexit vote was about 62% in favor of leaving, according to data that's in need that they pulled together, and that's across the political spectrum. it's not just the conservative, the conservative party who have got all the brexit voters and their constituencies. it's a thorny issue for them, but they're going to focus come the vote. they're going to focus on getting trose amay to reveal scommor try to shape them. jonathan: speculation in the united kingdom is you just have another election, the go early. the economy is still holding up, you increase your majority in parliament. what are the chances of that actually happening, simon? simon: a lot of chat other that
yesterday. you raise your group, high likelihood, but they still see at 20%, although deutsche bank now sees it as a base case for general election next year. if you take the current opinion polls, theresa may would win that election, win more seats, allow they're claim a personal mandate. remember, david cameron was the person who led them into the last election. they've been taken to the country and that she could press on. at the same time, do you want o believe the opinion polls? she plans to sit through 2020, and going soon, it would also force her to revise the parliament out, which currently bolts her into a 2020 election. jonathan: simon kennedy, great
to have you with us. david, as we needed another election on the cards, so i think in the next six months, we've got the german election, french elections, and then next week as well. david: elections all over the place. we're going to turn to u.s. politics. with the election just four days away, national polls continue to tighten between donald trump and hillary clinton. one of the biggest differences in policy between the two candidates is how they would handle the economy. donald trump has promised to raise the sandrate increase 25 million jobs over the next decade. joining us is andy puzder, c.e.o. of restaurants and someone who advises the trump campaign on economic policy. welcome. good to have you here. let's start with those 25 million jobs that donald trump has said that he would help create. we're about to get jobs numbers near less than an hour, about 55 minutes from now in the united states. as i see the numbers coming out of the bureau of labor statistics, we only have 7.9 million unemployed. how would you fill those 25
million jobs? andy: you have to not just look at the number of unemployed, you have to look at people that are out of the labor force. if you haven't looked for a job in 30 days, you're not considered in the labor force. and there are tens of millions of people who aren't in the labor force. we've got about six million people out of the labor force who would like a job now. we've got another five or six million people that are working part-time for economic reasons, because they can't found a full-time job. there's plenty of opportunities to create 25 million full-time jobs. there are a lot of people out there that would love to have a job that can't find one right now, or can't find one that pays them enough that tonight take the job. david: in the history of the country, have we got tonight level of full employment you're describing, where all the people are actually employed, and how would mr. trump get to that level? andy: you don't have to get to the point where everybody who wants a job is employed. the labor participation rate
was 65.7% when president obama took office. and when the recessions ended in june of 2009. it's now been under 63% for over two years. it hasn't been that low since jimmy carter was president. we've got a lot of room to move. you move that two or three percent, you're talking about employing tens of millions of people. you can get to the 25 million more people employed now. you just got to present them with jobs and careers that people want, that people are willing to go out and fight for, that they're willing to get the training for. so there's huge opportunity here. alix: that brings the question of whether or not we're seeing is structural versus cyclical. i've charted payroll versus u.s. g.d.p. the g.d.p. is the orange line. pay vole white. you keep having payrolls continuing to climb, but g.d.p. stagnates. why are you so convinced this is a structural issue and not the stagnant growth? andy: look, stagnant growth is a huge problem.
when you're coming out of a recession, you want g.d.p. to be above the average, because it's below the average during the recession f. you're going to recover, it's called a recovery, you've got to take it above. the average has been about 3%. alix: what if this is actually structural and we'll see lower growth for longer? we're not going to get back to the 3%, 4% we saw last time when it was actual this will good. andy: because we have tax policies where people are trying to redistribute income instead of incentivize investment, which is why g.d.p. is down, because we don't have investment. trump would turn that around. because we've got an energy policy that looks more towards trying to solve the world's climate change problem than bringing about energy independence in the united states. that's not structural. that's policy. we've got a regulatory state that has grown to the point where businesses are under a huge burden that they need to get out from under, including what's happening with obamacare, which is doing significant damage to the country. that's structural, but it's based on obama administration policy. and then you've got trade deals
that are generating these massive trade deficits. trade is great. even trade deficits are ok. but massive trade deficits hurt america's working and middle class. with tax policy, energy policy, regulatory policy, and trade policy, of course g.d.p. is stagnated. that's why we need a change. that's why we need new policies. it's a structure that will never go up. david: let's start with the trade policy. we've had enormous growth during the liberalization of international trade. is it possible to eliminate that sort of deficit without curtailing international trade, and what would that do to u.s. economic growth? andy: the problem with growth due to international trade is that while it benefits the wealthy, because the cost of goods go down, and it benefits people that are on fixed government incomes because the price of goods go down, it really hurts middle and working class americans, because they take the brunt when wages go lower, because they're now competing with people overseas where there are lacks environmental policies, where
there are people willing to work for far less than you would work in the united states. and the big -- large corporations take advantage of that. corporations with global trade deals take advantage of that. but it's hurting working and middle class americans, which is holding down economic growth, which is holding down wages, which is holding down employment. so what we need to do is get a more balanced, a fairer trade policy. it's not that trade is bad. the problem is stupid trade is bad. what we've got now is a lot of stupid trade. david: we're now less than 50 minutes away from the jobs numbers. what are you seeing in terms of employment? are you hiring people, and what's happening to wages in your restaurants? andy: wages are going up slowly in the restaurant industry, because people are competing for better employees. we want to hire better and better employees. but the fact of the matter is, this year, the restaurant industry is going through something of a restaurant recession. traffic is down about 3%. there was research out of a
group called civic science that showed that it's basically due to increased obamacare premium that is people are not going to restaurants as often. so restaurant growth generally is down. it's a problem. it's a very significant problem that we need to address. alix: thank you so much for joining us, andy puzder, c.e.o. of c.k.e. restaurants. come up, as the polls tighten, betting on voluntarily at this timity has become the most expensive in more than a year. plus, the s&p is in jeopardy perhaps to falling 13%. our next guest says one election outcome makes that a real possibility. that's all ahead. and we are counting down to u.s. payroll. you're looking at a beautiful live shot of capitol hill in washington, d.c. those labor numbers coming out in 45 minutes. this is bloomberg. ♪
i'm here in the hewlett-packard enterprise greenroom. come up, alan krueger, princeton professor. jonathan: from new york, this is bloomberg. we are less than five months into the u.k. surprise brexit. flashbacks are starting to haunt some traders. volatility has spiked in recent weeks surrounding the uncertainty around the u.s. election and the twolse between donald trump and lin clinton. are we ready for brexit-style turbulence on tuesday? with me is bloomberg news f.x. reporter, who's just written about this. brexit surprise, are we positioning for something that extreme at this point? >> well, people are not taking any chances. this brexit experience has
burned many people and taught them not to be complacent about the potential outcomes of a political contest. before, the polls are starting to look like hillary information lead. now it looks like polls are tightening. there are potential outcomes in terms of congress and the keup of congress, as well as the potential for a contested election. jonathan: we had a brexit surprise. but if you look at the action ahead of the vote in the u.k. and the cable rate, a ton of perks were taken out. protection was incredibly expensive t. wasn't that the market was shocked by this, it was prepared for it on june 23 to some extent. >> sure, and i think that that's what people are doing right now, as well, to try to protect themselves in any way possible, whether it's using options, whether it's stress testing portfolios to make sure that they're prepared for any risk events. it's doing as many things as they can to sort of ready the battle stations, staff up, lot of people said they're going to be staffed all night.
they might have double staffing in some instances, pizza, coffee, the whole thing. >> i remember sitting down with the swiss national bank president and asked him why thursday? why did you pull the plug on the cap that day, that specific time? he said we thought there would be the most liquidity in the f.x. market. we thought that was when the market could handle it. i wonder, if this kind of thing, you don't have any control on when the headline drops across and the market has to move. how do they prepare for that kind of thing? >> that's the concern. everyone is talking about iquid in the foreign exchange. the same time the election results are going to come out, so i think there are a lot of people who are locking at that liquidity and very worried that something big could concern uring the trading hours. jonathan: thank you very much for joining us to break that down. alix: take a look at the bloomberg here. this chart, v.i.x., the top panel is the v.i.x., which is
protection against equities, and the v-v.i.x. is basically the v.i.x. of the v.i.x. this looks at the volatility that's been priced in. a huge surge in the past few days. the yellow lines are the five-year moving average, well above that level. for more, we're joined by keith parker. keith, how much more volatility in stocks need to be priced in over the next few days? >> i think if you look back to friday and the announcement, it was the first election-related news to hit during the u.s. trading hours, so it gave you a decent read behalf actually may play out in markets, and it confirms our view that u.s. elections will be first and remost a risk on, risk-off event. if you extrapolate the news we saw, it recovered some on friday, and also going back to the first debate, which trump lost, you saw s&p futures rise about 75 blips and four or five other election-related events, and you compare s&p futures moves to shifts in election
odds. it suggests the s&p could move percentage y 10 point shift in election odds. if you extrapolate that, it points to 10% down percentage point shift side in the trump win and potentially almost 4% to 5% for a hillary clinton. alix: not everyone agrees with you. peter, a trump surrogate was on with us a few days ago, giving us his prediction if trump won. take a listen. >> i say dow 25,000 in four years with a trump presidency, because if you simply look at it, david, what you have is stock prices responding to the expectation of a future corporate earnings. we know what we get from hillary clinton. we get higher taxes, more regulation, shutting down the fuel industry, and big trade deficits. that's not a recipe for growth. that's a recipe for the kind of paper bull market we're in
right now. i tell you what, donald trump wins, i'm long the market. clinton wins, i'm short. alix: 25,000 is a very large projection for the dow. but the idea is you do have the stimulus. it's better for earnings. why doesn't that hold water with your prediction? >> to me, you see what markets are telling us, and i think about a two-step process, which is which trump shows up. is it good trump or bad trump? so it's the first thing out of trump's mouth talking about labeling china, a manipulator, talking about immigration and whatnot, or is it talking about the fiscal program, the tax program, which is indeed corporate-friendly? at that point, i think the market would take it as a positive, because equities are all about confidence. we need confidence at this point. if a trump win doesn't engender that, i think they could recover. david: there's a wave election, where the house would go
democrat, or donald trump becoming president, are the polls doing the markets a favor by narrowing the race so they have time to absorb the possibility of a trump presidency and price it in? >> i think you're seeing the polls forcing markets to price in closer to a 50-50. i'm not sure if we get there. but also take notice to the differences in the related policies. so i think polls are doing investors a favor in that we are focused again on fiscal. we are focused on the problems. alix: let's look at all asset classes. which is the most sensitive on tuesday and wednesday? f.x. commodities rates or equities. >> i think if you lock at the last couple of days, equities have been the most sensitive. would i have been surprised about the fall in the dollar? and rates unabated, adjusted basis compared to the move in equities, have been less sense sive. alix: what's the potential for a big gap on wednesday morning? and is the gap to the upside or
downside? where's the risk? >> i think the gap risk i think is to the downside, in terms of positions have been pulled back a bit, but i don't think -- there's no signs of panic the but i think liquidity is an issue in all markets, and something that my client calls are focused on, and clients are worried about. alix: great stuff. keith also on tuesday, keith parker, barclays u.s. head of asset allocation. coming up, volatility spiking across the globe. i'm going to show you how the polls are impacting the markets. it was a big week across the board. ♪
ninth day, that would be the first time, the biggest losing streak since 19 0. it goes to -- since 1980. it goes to show how much money has flown out of u.s. equities. five weeks of outflow the, the longest selling streak since the beginning of the year. the other part of the story has been with volatility. we talk a lot about the v.i.x. and volatility here in the u.s., but truly, that volatility was worldwide. if you look at u.s. volatility, it's the white line, european voluntarily at this timity is the blue line. u.k. volatility, purple. japanese volatility, that red. japanese and european volatility actually spiking the highest, but nonetheless, a huge regrading across global equities in terms behalf to expect over the next four days. and the other part of the story this week has been a rush into safe haven assets, like the yen and like gold. this tells that story. that blue line is euro-dollar, one-week volatility. the orange line is the
volatility one week for gold. and the white bar is u.s.-mexican peso. of course the dollar peso has the most volatility with a trump presidency. that spiked here on the abc poll earlier this week that showed that trump was actually in the lead by one point. gold, the volatility has been moving higher. citi group saying you could see a gap higher if you get a trump presidency. you can't discount a euro dollar as well. volatility much more subdued here. nonetheless, this really categorize this is week. you've got a selloff. u a jump in volatility all across global equities, and you have that rush into safe haven assets. jonathan: thank you very much, alix. coming up, just over 30 minutes away from u.s. payroll. we'll break the numbers. and then we'll get results with bill gross. the expectations of 173 down. this is up from the previous month. 4.9%, unemployment rate,
expected to job from 5% previously. wages, the estimate .6% year-on-year. this is the month of october. the payroll report just 34 minutes away. the markets look like this, futures marginally negative, down by 15 points, unchanged on the s&p. in europe, we roll over. the strerling strength story in the equity market, switch it up, six straight days of gains for the cable rate, inching toward the 125, up a third of 1%, the longest winning streak for the pound against the dollar since march of this year. the payrolls report just 30 minutes and change away. from new york, this is bloomberg. ♪
daybreak." we count you down to a payrolls report just 30 minutes, 10 seconds away. futures stable, down 6 on the dow, going nowhere on the s&p 500 after an eight-day losing streak. get to the other board. this is how they're set autopsy head of the payroll report. cable rate inching toward 125. softer dollar story in there, 179 is how we trade on treasuries. yields lower on the 10-year by two basis points. >> here's what you need to know at this hour. the october jobs report just 30 minutes away, dropping four days before the u.s. election. economists are forecasting 173,000 jobs to be created last month. that data out at 8:30 a.m. eastern time. and heading into the final week of the presidential race, it may all come down to just a few states. according to analysis from bloomberg politics, trump is showing strength in ohio and iowa, while hillary clinton's advantage looks stronger in north carolina and nevada. and the election uncertainty playing out in markets. the s&p 500 having its longest losing streak since the financial crisis in 2008. you got crude holding near
one-month lows, and investors rotate out. and that's what you need to know at this hour. david? david: less than 30 minutes now to wait until we get the jobs numbers. for more, we turn to our chief u.s. economist for bloomberg intelligence. thanks for being back with us. what's the goldilocks number here? the predictions are about 173, 175. what's the goldilocks number in terms of what the fed is looking for? carl: i think goldilocks for the fed is actually even lower than the consensus. i would say in the vicinity of 150,000 would be good enough for the fed to feel confident that the economy is improving relative to the first half of the year and that we're on solid footing heading into next year. if we're north of 200,000, going back to goldilocks, that might be a little bit too hot, and you'll see the pressure start to mount that potentially the fed is going to have to go faster than just the two rate hikes they're signaling for next year.
that being said, if we break down the voters, there's a strong, dovish inclination next year. hurdle to get to three hikes versus two is high. david: it's also the wages, when you talk about too hot, we're looking at a 2.% annual increase in wages. what would cause them real concern about inflation? carl: 2.6 is essentially the top end of the range. if we're breaking above that range, if we're heading towards 3% or more, which i don't think we get there today, but i think that that's possible by year end, then that's going to send a stark signal to policy makers that, you know, there have been questions about, you know, how close are we to full employment and what metrics should we be watching. full employment is something you see in the rearview mirror. when you see wage pressure starting to break out of their range, that tells you that you have reached full employment. jonathan: the bottom line is the fed hasn't communicated any numbers to the market on what some further improvement actually means between now and
december and what they were waiting around to see over the next month for them to hike. i just wonder if actually it's up to the markets to interpret the numbers today as to whether that is done, and then the fed makes a move. if they just decide, you know what, we're going to back off, the federal reserve, even if 100 k is good enough, fine 80 k is good enough, if the market is not primed, they won't move, will they? carl: i would argue the market is primed at this point if we look at where fed funds futures are pricing in the likelihood of a december meeting. it would take a very weak report to really clobber market expectations for the fed, and then i think you would see a significant campaign from policy makers to reinforce the notion that december is still very much in the picture, more than the jobs report at this point. i think the fed is watching for potential post-election market reactions in the tightening of financial conditions. that would be the major threat to december at this point.
jonathan: great to have you with us, carl. for more on key things to watch, alan krueger, prince ton professor will be joining us very shortly. the director of gleable macro at fidelity investments joins us around the table now. i'll extend that question for you. they've kept it open, looked at property in the market, 80%, december, make a move. they've left this open paragraph, we need to see some improvement. what is some? >> i think, barring an extremely bad number or a tail event next tuesday, i think they're going to go -- the odds are 78%. they've been teeing this up, the markets are on board. the chinese have been devaluing the yuan prewere actively the last six months. that contagious feedback group we saw a year ago, when they did one hike and promised four more, i don't think we are going to get that.
i think earnings growth is bottoming. i think they're going to go, and they have the free option to do so. the markets are on board, and i think it has to be a really bad number. going into september, they needed the data to be strong enough to go, and i think now they need the data to be weak enough not to go, and it would have to be a real bombshell. alix: seems like, ok, maybe the jobs number will be all right, but it's really the future that's at risk here. take a look at this chart. this is the nifb small business hiring plan, coming to you from the terminal here. that actually rolling over. it's not unique. we also saw household expectations for a change in the unemployment rate, also falling year-on-year. consumer sentiment is starting to roll over. alan krueger joining us from princeton university, today might be fine, but are these warning signs? >> i wouldn't take that too seriously. i think that the economy can continue to expand. small business has been challenged throughout the recovery, in part because they're so dependent on bank financing, and banks were impaired after the financial
crisis. that's one area where i think we can see some improvement in the years to come. alix: what do you expect for today? future not a problem. forget it. small businessment sentiment, forget it. what kind of strength do we see today? how does that follow through? alan: i wouldn't put too much stress on today, to be honest. we saw good growth in q-3. productivity number was encouragely that to me is one of the most important economic indicators we've had recently over 3% labor productivity in q-3. so that keeps up. i think the economy can be in a stronger position. with unemployment insurance claims low, i wouldn't put too much weight on today's number. it would take a few jobs report, i think, to change the outlook in terms of how the labor market is doing. >> i think you speak to something important, and this has been the conundrum for the fed, that a few years ago the fed kept talking about the escape velocity, and they can normalize policy. here we are six, seven years after the financial crisis, and
the jobless rate has been cut in half from 10 to 5, and the real g.d.p. never got out of this 1.5% to 2% growth track. so we have sort of the inflation, we've reached the inflation threshold in the economy without getting escape velocity, and i think that's the conundrum for the fed. do they keep pressing and promising more rate hikes, even though you didn't have the breakout in growth? jonathan: you touched on a word, normalize. we're redefining normalization in a radical way. a lot of people say 25 basis points, doesn't matter, 50 basis points is not a big deal. but alan, what has changed over the last several decades is 25 basis points now versus 20 years ago, the sent activity to that has changed. how important is that? alan: more important is the path. i think that there is kind of a path for 25 because point increase in december. -- for 25 basis point increase in december. interest rates are still going to be negative. the fed policy will still be
accommodating the expansion. i think the key question is what happens in 2017. are they on a path for one increase, two increases, three increases? how quickly too they have to raise rates if the expansion is continuing and inflation gets above the 2% target? david: one of the things we get out of these numbers is a vantage point into the u.s. economy, the labor part of the economy, but overall. if you had predicted three years ago we'd be adding 200,000 jobs a month for this period of time, still be at 5% unemployment, and not have inflation growing any faster than it is, you would have said it wouldn't have happened. what have we learned about the economy we didn't know then? alan: i think we've had some positive developments with energy, no question, which have brought down oil prices and helped to keep the top-line inflation rate low. the labor force participation rate continued to slide down in the recovery. that was something i was expecting because of aging, but that was an open question. and i think it primarily is the result of retirements in the
baby boom generation. we are seeing real ways growth, and to be honest, i don't think too many people are expecting to see the rate fall from 8%, which is where it was three years ago, to 5% today. my job would have been a lot easier. i can tell you, if it was clear that that was happening when i was working in washington. alix: how do we read the labor force participation rate? that's one of the key numbers we get today. there's two schools of thought. one is the higher it goes, the more slack in the market, so you have to keep policy accommodative. or the higher it goes, it means we're absorbing slack. which part of the fence do you stand on your end? >> it's due to demographics, but part cyclical. as the economy gains speed and more people get jobs, more people re-enter the workforce it is. it is a bit of a moving target. coming back to the previous conversation, it is all about the intersection of growth and interest rates. a quarter point may not mean much, but against zero growth,
earnings have been contracting, the market can't tolerate a rise in interest rates unless it has growth to buffer that. so if earnings are growing at 6%, the fed can raise rates, nobody as going to care. when earnings are growing at zero, you have this indigestion whenever the fed starts to guide towards rate hikes. that's what we've been playing out. jonathan: we're talking about a hot economy. things aren't hot at all. g.d.p. has been rolling over. consumption is starting to look softer compared to previous quarters. that's not hot to me. inflation 7%. that ain't hot. you look at the path, and sure, things might pick up, but there's nothing hot about where this economy is going. by back to what the fed chair said when she explored the idea of allowing things to run hot, a high pressure economy. just because she might allow it doesn't mean it will happen. what is the prospect it will actually happen? alan: different parts of the economy are hotter than other parts. if you look at the labor market, we are seeing the strongest real wage growth we've seen in decades.
we had the fastest median income growth last year than what we have had ever. poverty rate came down by the most since the late 1990's. i think we are seeing the benefits of steps towards a high pressure economy, and i think it's interesting to think about exploring how much running room is there. that's why the labor force question i think is so important. we've seen a half a percentage point recovery in labor force participation. if that keeps going, i think that gives more running room to allow things to get a little bit stronger than some of the governors might feel comfortable with. at the same time, we also have to worry about possible bubbles in some financial markets, particular until corporate debt markets. so i think the fed is doing this very difficult balancing act, where it's not only worried about, you know, earnings and equity. it's worried about other financial markets, it's worried about the real economy. and so far, you know, i wouldn't criticize them. with the unemployment rate down 5%, with 15 million jobs added over the last seven years, g.d.p. growth is not as strong as one would like, but we're coming out of the deepest
economic crisis of our lifetime, and it's certainly a lot stronger than elsewhere in the world. you know, i think the problems that they're facing now are kind of the good problems that you want to have. jonathan: i would never criticize the fed, alan. alan krueger from princeton university. both of them speaking with us, as we count down to the payrolls report, 18 minutes away. let's get you headlines outside the business world. taylor: john, it's four days and counting until the election. in a new nationwide tracking poll, hillary clinton has a 47-4 lead over trump. clinton campaigned yesterday in north carolina with former rival, bernie sanders. trump also was in north carolina where he appeared with veterans. trump said he couldn't imagine clinton as commander in chief. while polls show the race is tight, trump's path appears to be harder. meanwhile, preelection day voting is almost complete. according to bloomberg politics analysis, donald trump is showing strength in iowa and ohio.
hillary clinton looks to be stronger in north carolina and nevada. democrats and republicans in florida have cast ballots in nearly even proportions. in paris, police are clearing out about 3,000 moy grants who turned sidewalks into a make-shift camp. the migrants are from sudan, ethiopia, and other countries. they're being taken to shelters, where they can apply for asylum. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i'm taylor riggs. this is bloomberg. alix? alix: thank you so much. u.s. equity futures flat into the jobs number in about 15 minutes' time. individual movers want to focus on starbucks, up almost 2% premarket. earnings beat same-store sales in the americas were actually up by 5%. the company also raised its dividend. they have new food items, as well as digital efforts helping to offset any kind of weakness in the food market that we might see. cbs also want to focus on as well, up over 2%. cbs c.e.o. les moonves saying
he opened the door to a possible merge we are viacom, saying it could work if structured correctly. he told analysts on his earnings call that it is there in the early stages of exploring a potential deal, by the way, they also reported better than expected sales and earnings. and wrapping up with go pro. it's a very different story for this company, down 18%, was down 25% yesterday after it was allowed to resume trading after earnings. here is why. they issued a very bleak holiday forecast, lowering its full-year affairs. bloomberg intelligence said that they lowered their guidance, and that really raises concerns over the company's execution and sales growth amid the fact they're having supply chain difficulties, as well as a lot of competition. david? david: alix, coming up, trumping the market. global investors are getting more anxious, which is driving them to cash faster than at any time in the last three years. we'll look at what a trump presidency would mean for the markets and the economy next. and later, bill gross of janus capital gives us his reaction to the october jobs report. this is bloomberg.
jonathan: this is "bloomberg daybreak." let's check the markets. the scene is set like this, 13 minutes away from the payrolls report. futures rolling over, down by 19 points on the dow, off by a single digit on the s&p 500. no drama there. the drama of the last eight days is weakness, softness in equity markets. an eight-day losing streak on the s&p 500. drama in the commodity markets. crude oling over, 44 handle -- crude rolling over, 44 handle, and potentially the biggest drop since 10 months ago after crept simple and a lot of discussion about the possibility, or the lack
thereof, that owe poke will finally agree on an agreement and implement any of the stuff they talked about. alix: i feel like we're doubting down to that. four days to go. you got polls tightening, volatility picking up, and the s&p is down yet another day, it would be the longest losing streak since 1980 as the markets begin to weigh a trump victory. we spoke with peter navarro, a donald trump economic advisor, earlier this week who has a take on what a trump presidency would mean for the markets. >> i say dow 25,000 in four years with a trump presidency. because if you simply look at it, david, what you have is stock prices responding to the expectation of a future in the corporate earnings. we know what we get from hillary clinton. we get higher taxes, more regulation, shutting down a fuel industry, and big trade deficits. that's not a recipe for growth. that's a recipe for the paper bull market we're in right now. trump wins, i'm long the market chingt clinton wins, i'm short.
alix: alan cruger is back, as well as the director of global macro at fidelity investments. 25,000 might seem extreme on the dow, but the idea is better growth, better earnings, better s&p. what do you think? >> the way i think of it, purely in investing terms, you look at a chart of the frontier, so lower left, very low risk, low return. upper right, very high risk, high return. you have to make a tradeoff between how much return they want versus how much risk they're willing to tolerate. to me, one candidate is the low vol, limited return candidate, at least i think that's the way the market sees t. the other candidate is off the charts with unknown returns. you really don't know. and the markets don't like uncertainty, and that's why i think the markets are trading lower because the election has become less of a sure thing than it seemed a week ago. and so we just have to see whether it's the the status quo
of the democrat, with a divided government, or whether it's one of the tail events, a democrat sweep or the republican. and we don't know at this point. but that's the way i look at it. so the upside is potentially much bigger, but there's also a lot of uncertainties, and what about the global trade economy, what happens there? david: let's take the structure, and i'm going put on a hypothesis. this is basically fixed income wins either way. if it's hillary clinton, you have sort of low, steady growth, that's sort of good for fixed income. but if it's, there's a right. is the viewer right? alan: i don't think so. donald trump is the only presidential candidate in history who said he would default on our debt for the full faith and credit of the u.s. in jeopardy. when he said he could renegotiate the debt. so i don't think that helps fixed income market, and i also think that the market is not only expressing volatility in terms of a potential trump
presidency, but also saying the direction is not good, and that's why wove seen the drop that we've seen recently, and that's why we saw, during the fist presidential debate, futures markets rise so sharply. >> we haven't seen a drop. eight-day losing streak, there's drama there, but it's a three percentage point move. let's not get ahead of ourselves. we're not talking huge drama. we talk about one week picking up because they now capture the actual event. what's the reality as far as you're concerned on the back of the market moves we've seen over the last week? >> the s&p is down 100 points from the high, which is back to where it was in june. it really is noise at this point. but clearly the market is rerating itself a little bit because the outcome seems a lot less certain than it did a week ago. i think in terms of fixed income, you're more likely to see a pickup in no, ma'am natural growth and inflation under trump, i think, and that probably would be not as good as the status quo.
alan: i think growth would be negative under a trump presidency, with what he said about tearing up trade deals, with what he said about deporting immigrant workers. that's what economists have concluded, could lead to a pretty long recessionly even apart from that, if you look at the movement and the change in the applied probability, his odds haven't got unthat much. if his odds have increased by 10%, they're saying you multithat by 10 times the market movement, the market participants are really expressing fear about what a trump presidency could do. alix: jurr yen, great to see you, thank you very much. and alan krueger will stick with us to help us look through the jobs number, out in eight minutes' time. coming up, election jitters. the dollar on pace for its biggest decline since august. a close race fuels that volatility. what does it mean in december? we are just moments away from the october payroll. the sun shining on capitol hill in d.c. after a disappointing
jonathan: five minutes away from a payrolls report. to today's morning meeting, where we hear what banks are looking at. the jobs jb just moments away. with us is a strategist who has 185,000 down as his prediction. he joins from us his headquarters over in new york. still with us, of course, is alan krueger, princeton university economics professor. four minutes away. and some changes. what are you looking for? >> i mean, we are looking for 185,000 on the jobs report, and average hourly earnings of .3%. i think the earnings component definitely important on this payroll report. we've seen signs of inflation kind of coming up through the system. tips are rallying, inflation expectations are rising.
inflation is rising a little bit. so there's signs of inflation, we needs to see that coming through the wage growth data in order to really get excited about that. so that could really -- that's what i'm keying on today. that could help the dollar kind of stall this little dollar sluggishness we're seeing related to the election and kind of help us get back on to a positive footing for the u.s. jonathan: i wonder if we get a muted reaction. this is why. this is the playbook. i look at the data, cyclical data that comes out in the united kingdom. the pound often doesn't react to it, because it's focusing so much on the politics. if you get a big blowout number today, or maybe something worse, aren't reall just on hold until next week? >> absolutely. if we get a big number today, you'll see a knee-jerk reaction, a jump, and we'll immediately sell right into that. the markets are definitely very nervous around the election next tuesday, and the dollar weak chance we've seen all week is 100% related to that. real rates in the u.s. are actually holding in really well, and that should be dollar
supportive, and yet we're selling off. so i think it's 100% election jitters, and you're right, we get a knee-jerk reaction today, and the markets is probably going to fade it. jonathan: if we do, where's the opportunity as far as you're concerned, brad? do you get the shakeout, what are you looking for ahead of next week? brad: it's really hard to call, unfortunately. the variables around the election are so big, so you kind of have to keep your protection on, don't take your protection off today. keep it on, and, you know, i think we're going to get to a place where you're going to want dollars again. dollar-yen higher would be my call, if we get smooth sailing through the election, and that's sort of a big if right now. jonathan: dollar yen higher, isn't that becoming a bin trade right now? brad: it is, but it's starting to manifest itself. it's going to climb a wall of worry, no doubt about it, but we are seeing a position. there's a long-held, long yen position in the market, slowly unwinding. people are starting to believe
that the dollar yen could actually get some legs. but we really need the clear 105, 106 definitively to kind of confirm that, and that's what i'm looking for there. jonathan: brad, great to have you with us, joining from us new york. it seems that if you do get a market reaction, the market is going to look to fade anyway, because the main event isn't today. it's next week. david: next tuesday, exactly. we're just now a minute and 50 seconds away from numbers. final thought from alan krueger? you said not to put too much importance on it. what will you? alan: labor force participation, wage growth. i think those are indications of how much running room there is for the fed, how patient it could be after december. i think those are key going forward. david: that participation number has been very stubborn, hasn't moved much. alan: in the last six months, it's up half a point. against the back drop of having fallen four percentage points over the previous decade, that's a significant rise, and
potentially due to a high-pressure labor market. we'll see. i think the demographics will take over, but that's why we look at the report. david: the numbers really are dramatically high, as jonathan just hypothesisized. what does it do for hillary clinton's campaign? alan: i think most voters have made up their mind. i found when i used to discuss the numbers in the white house, people made crazy claims about them. i'll never forget jack welch saying the numbers were made up, which was preposterous. there's actually an article in the "new york times" reiterating that was preposterous. one thing i would say, i think it's important that people have faith in our statistical agencies. they're trying to do the best job they can. jonathan: they're trying to do the best job they can, and they're going to deliver in 30 seconds. 30 seconds away from the payrolls reported, eight-day losing streak on the s&p 500. futures are stable and going nowhere. whip through the other asset classes for you, it's some dollar weakness. it's a pound that's been
strengthening for six straight days. if you look at the treasuries, i'll bring up the prices now. yields lower by one basis 1.80 for the year. the payrolls report, here it is. >> hundred 61,000 us is how many jobs were created in the month of october, not too hot, not too cold, and the unemployment rate dropped to 4.9%. in numbers are more or less line with economists estimates. the surprise in this jobs report is wage growth average -- wage growth, average hourly earnings up 4% for the month of october and 2.8% over the previous 12 months. growth the fastest wage in a 12 month period since july 2009, 2.8%. if the fed is looking for one
day to point in this report to bolster the case for a december rate hike, that may very well be it. this report shows a labor market that is continuing to make incremental improvements or at the very least, consolidating previous gains. the underemployment rate is down to 9.5%, the lowest we have seen since april 2008. the average work week was unchanged at 34.4 hours. revisions to the jobs numbers reported for august and september added 44,000. 161,000 and add 44,000, there are 200 and four additional -- 200-4000 additional jobs. the labor participation rate .icked down to 62.8% from 62.9% 195,000 people left the labor force.
many facture dropped by an additional 5000. wage from that strong growth there are that many big surprises in this october jobs report. not much to throw the fed of course and probably not much to influence the outcome of the election on tuesday. jonathan: erik schatzker from d.c., much more later. a miss on the headline number at 161 with 174 expected. a strong revision on the previous month. the big market move is the wage growth at 2.8%. the market reaction is fairly muted. 2-year note's about a basis point up. the dollar index stronger by about 1/10 of 1%. futures remain more or less exactly where they were. dow futures down seven and flat on the s&p 500.
that is a big beat on wage growth. david: we will join bill gross on radio to hear what he has to say but first we will hear from alan krueger. alan: this is a very solid report. i think this will not change the fed's views much. the 2.8% growth is a sign the labor market is increasing. jobless rate is down below 7% and given how important they are going to be for this election, that is something worth noting. alix: are we at max employment? alan: i do not think we are at maximum employment. the drop of 1/10 is not statistically significant over the backdrop of the past few months. we are going to have to see what direction the labor force participation is going, but
there will be headwinds for years to come with our population getting older. jonathan: we had ever to tom keene and david gura who speak on the radio about the jobs report. tom: having some technical difficulties here right now. willng us now, bill gross join us and we welcome bloomberg television as well. bill, good morning to you the basic idea i would suggest is it has not derailed september and certainly does not affect the election, another good report, and yet you continue to counsel caution. bill: i do. i would admit it is a good report. i zeroed in on two important higher, the work week is
than average and the earnings were growing more than normal as well. so you combine us together and that is good for the consumer going forward. i counsel caution on the basis of structural changes, on the basis of a recent report by the federal reserve itself done over six to 12 months but spoke to demographics and the negative influence on growth over the past several decades, and the potential for it to continue to be negative. i focus on structural items such and lowerath displacement of jobs. 1% toonomy to me is in a one and a half percent real growth mode. as we shift to markets and the influence of the growth on market which is an important consideration, earnings, not earnings per share, but earnings do not really grow at 1% to one and a half percent growth rates
and that has been the case for the past five quarters. gdp has average one and a half percent and we have had an earnings recession. better look at real growth as opposed to unemployment and employment for an accurate forecast as to where asset prices are headed. david: you bring up growth and we had those gdp numbers, 2.9%. maybe some worrying signs. how does that influence the id's path forward? bill: think they are not necessarily sensitive to gdp. termsd your discussion in of the fed. necessarily focusing on a specific growth measure and that is true. they focus on 2% inflation but that type of growth rate influences financial markets. should we get a shock in terms of an election, should we get an
ultimate realization with the major reason that equity markets are being held up, is due to the magic of central banks and quantitative easing, that at some point if markets start to decline the fed back off. the fed is a slave to the financial markets as opposed to vice versa, which is what i experienced and many of you have experienced over the past 10 to 20 to 30 years. david: you made the analogy of from what wers -- have seen in the intervening couple of weeks, do you see central bankers taking stock, reevaluating, becoming introspective or are they coming to think about or maybe except the limits to what they are doing? bill: i think to some extent. the ultimate question is what is rate, oreutral policy
just for the real economy and its reflection in a natural markets and asset prices, but for savers and saving institutions. i think an increasing number of fed numbers as well as other spokes men and women for other central banks are coming over to the side gradually. , three seen two dissents recently in terms of the fed statement but they are coming over to the side that is considered savers and the return on savings. tom: who are you going to support for president? it is four days to go, and i look at the job economy. i look at how you have been on financial repression. do you have a preferred candidate who can give us less bill gross financial repression? bill: i do not hear it trump -- i do not. .
trump has minorly affected the fed and i am not sure what would happen if he became president, whether yellen would be asked to leave are not. that does not speak to financial repression and the fact that interest rates may gradually move higher and remove some of that regression. is a status quo type of candidate and therefore the financial repression that has existed or seven or eight years in terms of lower interest rates would be part of her mantra, but she has never really spoken to that. i spoke with nicholas comfort about the effects of negative interest rates on commerzbank of germany. i get of interest rates are out there and you know it is a raging debate. do we need to pull ourselves away from this experiment of negative rates, do we maintain it into next year? what would be your counsel? bill: i think we need to pull away. it is one of the reasons yellen
has been influenced by some of the fed members in terms of just that consideration. experiment toan raise interest rates in a period of time in which inflation is quiescent, so to speak. subjectively as i have spoken for the last year or two, that it of interest rates have an influence on the real economy and that is not always positive and not always trickle down. to the extent that bank interest rate margins are narrowed and in that sector they are not doing extent that the pensions and 401(k)s and insurance companies are hurt by negative and narrow interest rate margins, that effects the real economy and has. david: dallas janus capital's bill gross with bloomberg surveillances tom keene and david gura. we will be back with more with
alix: this is bloomberg -- taylor: this is bloomberg daybreak. coming up in the next hour, roger altman. jonathan: from new york, this is bloomberg. i am jonathan ferro. let's get you up to speed on the jobs report. average hourly hours climbing the most since 2009. features still stable, going nowhere. where you did see a move was yields him a just a punch higher at the front end of the curve. now yields unchanged.
the dollar firming up a touch with dollar-yen back to 1.03. the cable rate showing some strength of 1.84. alix: alan krueger is still with us. a big jobs number, 161,000, it was a miss but it was a revision from september. alan: the more i look at the report the more solid it appears. last month you will remember the first report was 156,000 jobs were added in august -- in september. that was revised to 191,000. we would've had a different discussion a month ago. i would not be surprised if today's number gets revised up in roughly the same range. i think today's report shows the job market is continuing to heal. there is more progress that can be made, but two .8% wage growth is a we are getting back near full employment.
is an% wage growth indication we are getting back near full employment. wage growth,bout how far can it go before the fed gets nervous about inflation? alan: the markets were not concerned about it so i'm surprised by that reaction. fed witht suggests the seeing what it was expecting to be seeing. you might've thought it was a little optimistic that they thought the job market would continue to firm, that wages would continue to grow and inflation would move toward their target. i think we are now in a sweet spot where wage growth can pick up without jeopardizing runaway inflation. average, 2% target is which means the inflation rate if it is below 2% or above 2% to hit the long run average, not everyone views it the same way. i think this is a sign that there is still room for the
alix: october is jobs report trickling in. let's dig into the numbers. overall change, 161,000 jobs were added, lower than estimated but september was revised higher to 191,000 jobs. additions came in at about 44,000 higher. the unemployment rate ticking down to 4.9%. we are going to go to tom keene and david gura on bloomberg radio. we do not have that many potholes in newport beach.
this sort of pan by what other countries and other central banks are doing. with the boj, that is a significant magnet for u.s. interest rates to stay relatively low. a japanese investor can sell a jgb to their central bank at minus six basis points for the 10 year and reinvest it in treasuries at a currency hedged level, maybe 4045 basis points pick up. -- 40 or 45 basis points pick up . it is important what happens into the election and you have to blend it all into consideration. to me that speaks to interest rates, the 10 year being in a relatively tight range because of the japanese magnet and the potential for higher government spending after the election. jonathan: let's break out the six month intraday range and talk about a bull market. are you seeing anything that suggests the 30 year bull market
is over? bill: well, i see a suggested that perhaps the rate have bottomed. that is not a definition unable market being over. i would suggest that would be the initiation of a bear market. i simply do not see that as long as central banks continue to do what they do. the three banks that are actively engaged now, the u.k., ecb, and bank of japan, it is $180 billion a month in terms of thating towards bonds ultimately flows into equities. even though the countries are buying equities and corporate bonds, so as long as that continues it is very hard for a bear market. it does not mean -- and i will put it right out front as i have for the past 12 to 24 months -- this artificial stimulation one day will end in ruin. as long as the money keeps being
pumped out then you have a buyer for bonds in the face of higher inflation, whether it is 2% or two and a half percent still to be defined. it is hard for a bear market to begin. jonathan: what we have seen recently is a steepening of the yield curve. he came on bloomberg television a couple of months ago and said the short duration. as your portfolio changed since then? bill: the duration has been short, centering around zero. my point, and i have talked to tom and mike about this over the past several quarters, in this type of environment if your main theory is that yields are range bound within a 20 to 25 basis point range, it is not the buying or selling on a trading basis that produces total return. the selling of volatility around this range, that produces a much
higher yield and return. you have to be right on that range and if the ranges are .roken you are not making money the selling of calls and puts on a range bound market is perhaps the most attractive way to make money in that type of market. ja that is whatnus has been doing and that is why we are ahead. about we have written what central-bank policy is going to mean for capitalism. do you see a transformation underway now? is it inevitable? bill: i do, and you can see it, there is a counter argument to disclose. you can see it i think in the form of capital expenditures relative to gdp. zero interest rates negative interest rates do is
bring consumption forward in a multitude of fashions. to the extent that consumption has been brought forward and corporations sent that, -- sense that future consumption will not match past consumption, then capitalism itself, the willingness to invest money in capital plants and equipment is diminished. we also see it in terms of productivity numbers. yes, they were good this week, 3%, but year on year is a flat 0% productivity increase. we are beginning to see capitalism as we once knew it fade margin -- fade at the margin, and isn't because of 0% interest rates or some savings glut as x chairman bernanke would describe? i think it is the former as opposed to the latter. i do not think any economist with common sense as opposed to university trained modeling,
when deny that the 0% interest rates, capitalism cannot function if there is no return on short-term money or low return on long-term money. it is common sense. alix: that was janus capital's bill gross with tom keene, jonathan ferro, and david gura. i just want to update you on where markets are trading. equities trying to claw their way higher, still softness in europe. we are seeing yields back down a little bit, the 10 year yield off by about two basis points, re-rating and the market. the fed rate hike in december looks to be solid. ♪
jonathan ferro alongside david westin and alix steel. futures turned a little bit higher, up six points on the dow and three on the s&p 500 after an eight day losing streak on the s&p 500. in the fx market, a stronger dollar with dollar-yen and a 1.03 handle as yields drift lower, two basis points. alix: signs of steady progress in the u.s. labor market. employers added 161,000 jobs in october and september payrolls revised out to 191 -- 191,000. wages rising by the most since 2009. headed into the final weekend of the presidential race it may come down to a couple states. donald trump showing strength in ohio and iowa while hillary clinton's advantage in early voting look stronger in north
carolina and nevada. the uncertainty is playing out in markets, the s&p with its longest losing streak since the 2008 crisis. that is what you need to know. david: you just heard about the basic numbers on jobs. we are now going to tartu erik schatzker. less than 30 minutes ago he gave us those numbers and you have had a chance to look behind the top line numbers. what can you tell us about the blend of jobs that were created? .rik: i can tell you a lot i have been looking behind the headline numbers for several to see if there are interesting trends that might help explain why -- how americans are thinking as they head toward the poles. here is one thing i would draw attention to, a mix of job gains is increasingly skewed toward higher earning industries. you will recall back in february, march, april, most of the jobs being created were in
low-paying industries like retail or hospitality. now we see those gains concentrated in business and professional services where earnings were incomes are about 15% higher than the national average in the private economy. more people are getting better paying jobs. that is one thing to point out. we see the same thing not just in business and professional services but financial activities, and fewer losses in high-paying jobs like manufacturing. many factoring continues to lose jobs but not at the pace we saw earlier in the year, and we do not have a lot of job growth in the low-paying industries. 1000, butt jobs, just earlier in the year it was generating 50,000 jobs. hospitality was largely unchanged. there is one other thing i would point to which is demographics.
alan krueger pointed out that the unemployment rate among hispanics dropped dramatically to 5.7% from 6.4% in september. earlier in the year in july it was as low as 5.4% but perhaps that is something, even though that is a volatile number and that may be something that influences voter behavior. another thing we can point to is the unemployment rate among african-americans, it ticked up from 8.4 -- from 8.3% to eight ford -- 8.4%. these numbers may help us understand the mindset of the american voter come tuesday. david: thank you. -- ihan: let's bring in want to deal with the economics and go away from the details we touched on, just talk about the basics. 2.8% wage growth. speak to main street and say why
you need to hike rates so wages youot go up much more, can explain that in the world of economics in simple terms? roger: there are forces in both directions staying steady and raising rates. i think one can make an argument that you want this recovery to keep going. you do not want to be in a situation where we have to raise rates abruptly in the future to a could bring recovery halt. some are worried that the financial markets are getting frothy and that we could have bubbles particularly in the corporate debt market. i do not think anyone is talking about raising rates so quickly it will bring the expansion to a halt. it will still be accommodated monetary policy even if the fed raises rates in december. jonathan: the financial stability is an argument that has been made. what do you see? is there anything that suggests there is a threat? roger: alan put his finger on a
key point. raising the shortest term rates from give or take 35 basis point to 60 basis points is not going to, in my view, affect anyone's decision to invest or borrow and i do not think it will derail anything from the point of view of the economic progress we are making. in terms of financial starkest -- financial market stability, i do not see any evidence there are bubblelike factors building up, at least in the main markets we all look at. alix: the question is for how long does that last question mark dennis lockhart -- how long does that last? dennis lockhart saying, how long can that last? where do you see full employment? alan: i think the unemployment rate will continue to drift to down. in some sense wage growth has picked up in that suggests the market is getting tight.
we are seeing the benefits of a high-pressure economy but we could see the unemployment rate drift below 4% as we did in the late 1990's, particularly as growth recovers. also i think given that inflation was below the 2% target for so long, it would be acceptable for the fed to allow inflation to be a little bit above the target to average out to 2%. alix: how much can the market tolerate an overshoot? roger: i think alan is right for another reason. the unemployment rate is still at 9.5%, certainly very high. the labor participation rate ticked down, not up. -- picked up, not down, i am sorry. there is still meaningful slack so i'll agree with alan also. the headline unemployment rate could go down further. i think the whole issue about the fed rate hike is
psychological, is not real in terms of the economy and the effects on the economy. said, it is not going to have any effect in terms of deterring investment or economic progress, so i think it is a good idea for fed to print this psychological focus and get it behind them. david: it may not affect fundamentally investment but i wonder if there is another effect of a 25 basis point race. central banks around the world have proven they can get asset values up and there is a danger in that. some value in the market is because of central-bank policy. starting to withdraw the central banks out so they stand on their own bottom for these assets, there is a value to that. roger: i think the fed strategy beginning in 2009 to try to enable household wealth to recover and get the consumer revived has worked very well at
least in the united states. i do not think that a quarter-point increase of this point is going to change that dynamic in terms of asset values . it is just too small to do that. i think you have to give the monetary authorities good marks for that strategy because they did not have any other strategy. there was no other strategy. eventually it will be good to get markets and asset values waned off of higher progressive monetary policy, but so far it has been the only game in town and it has worked. jonathan: do you think that is possible, can you wean off markets given what they have been doing for the past few years? can you really pull back at this point? roger: the question is whether equity markets are going to just if monetarybe happy policy embarks on its long,
slow, steady tightening progress. i do not think it well. the anticipated december move, i do not think it will have much of an effect. i do not know what the course of monetary policy will be over three to four years but i expected to be very slow, probably so slow that markets take it in stride. if we are really going to see, core inflation is 1.7%. full onees up a hundred basis points and monetary policy is steadily tightened, markets historically speaking would pull back. alix: thank you so much. alan krueger, thank you very much. thank you for being with us over the last hour. and roger altman will be sticking with us. making an update on news business -- i cannot talk anymore. david: you talk good.
alix: we are going to go to taylor riggs. election day is just four days away which means the early voting period is nearly complete. donald trump is showing early voting strength in iowa and ohio while clinton is stronger in north carolina and a vodka. 2.6 million -- and nevada. 2.6 million votes have already been cast. a rocky are pushing into the city of mosul. forier iraqi troops entered the first time in more than two years. they are backed by a us-led coalition. in paris police are clearing out 3000 migrants who turned sidewalks into a makeshift camp. they are from sudan, ethiopia, and other nations. they are being taken to shelters to apply for asylum. global news 24 hours a day, powered by our 2600 journalists
and analysts in more than 120 countries. i and taylor riggs. this is bloomberg. we trade ins where u.s. equity futures about 30 minutes before the open, flat across the board, s&p futures up 1/10 of 1%. it is significant because the s&p has seen its worst losing streak since 2008. movers, an upside surprise. vegas sands saw a jump in profit after opening their newest resort in macau. starbucks flat. these results were solid but not enough for an upgrade. monster beverage monster lee down, a miss on earnings and revenue. this quarter really had to do more with the company's
transition to the coca-cola system according to the ceo. david: the race to the white house is tightening. roger altman will tell us what the first days of a clinton presidency could look like. later this hour, black rocks rick rieder is with us for a take on the job numbers and whether or not we will see a rate hike come december. this is bloomberg. ♪
first 100 days of a hillary clinton presidency look like? roger: apart from the whole process of staffing up the new administration, putting that aside, which is always a challenge, i think the biggest challenge is going to be the prospect of a divided congress, the likelihood the republicans hold the house. we do not know what the senate will be that let's assume democrats regain it by a tiny margin. a divided congress. one thing that i find people have not focused on is illustrated by a fact. the last timed it a newly elected democratic president came into office and both houses were not controlled by the democrats was 1885. and people forget that bill clinton,president bill his party had both houses during
his first two years and some of his famous achievements occurred then by narrow votes. president obama, his first two years democrats had both houses. dealing with a divided congress is going to be quite challenging , especially if you think about the so-called pay forwards, the revenue changes she has proposed to pay for college affordability, infrastructure, and other, paid family leave and so forth. david: you have had experience with high levels of government in washington, ever two at the treasury department. take what she cares about and put aside what is doable with the congress against you. what could she pick off to make some progress? roger: of course i do not know what the number one priority will be an number two. those you typically make during
the transition when he sighs up the new congress and what you think you can achieve. i would think that with some creativity and lock, and infrastructure initiative could go forward because both parties favor a federal initiative on infrastructure. they had just disagreed on how to pay for it and govern it. i think there is a chance for that which has certain bipartisan appeal. i would think criminal justice reform has also got a chance. and then of course the whole question of her overall economic plan, these other elements, that will be challenging. you have some very important other issues like what happens to the garland nomination. david: merit garland. roger: does that go to the new congress? how much oxygen does that suck out of the process? this is going to be extraordinarily complicated because of this prospect.
we will see what the exact results are of a divided congress. david: if hillary clinton is elected there will be a substantial portion of the country voting the other way. we heard from some people supportive of donald trump. we want you to hear what they say. roger: do i have to? david: try. >> we have tax policies were people are trying to redistribute income rather than incentivize investment. because we have an energy policy that looks more toward trying to solve the world's climate change policy -- problem then bring in about energy independence, that is policy. businesses are under a huge burden that they need to get out from under, including what is happening with obamacare which is doing significant damage to .he country and then you have trade deals that have generated these massive trade deficit. taxes,lans to cut
eliminate our trade deficits. they were increased growth. david: why would a hillary clinton administration be progrowth? will -- >> i think it will. growth is proceeding at a decent rate. it has a real impact on good paying jobs and obviously the underlying investment. that is a progrowth step. medium-term, the biggest challenge here, and she said , is themany times degree to which about half of americans have experienced falling living standards. the trunk candidacy -- trout candidacy reflects -- trump candidacy reflects a great deal of anger and i believe that is
economic based. this reality of declining living standards for so many americans, we have to get that up and it will be difficult unless we get more young americans to enter and graduate from college. your lifetime earnings expectation depending on the amount of education you have, and unless you have a college education is not growing. that is why she has proposed college affordability. i believe firmly it is going to be a progrowth administration. after all, the other clinton administration, bill clinton, certainly deserves high marks. david: of which you were a part. alix: the other side of the argument, roger altman is sticking with us. what does the election and heightened volatility say about m&a and effect issuance going forward? this is bloomberg. ♪
alix: this is bloomberg daybreak. markets very volatile in recent months as investors awake -- await the election outputs -- results. what does that mean for m&a? he willrump has said block the at&t time warner deal. with us is roger altman, founder of evercore. if you take a look at the bloomberg, it shows the deal count for the m&a we have seen over the last five years. we are about 4000 in december of 2016. what happens, what is the rhetoric you are hearing? roger: m&a volumes across the world are quite healthy. 2015 was a record year in terms of dollar value announced transactions. 2016 is slightly below that but still extremely high.
right now you have a healthy environment, not surprising because you have low interest rates, robust credit, and decent business confidence. will it change in 2017? i do not know the answer to that, but i rather doubt it. as long as these court economic elements remain in place. one misconception, a pretty broad misconception, is the percentage of m&a that is susceptible to antitrust review, serious antitrust review. it is tiny. if you really large ones, but the percentage of transactions you mentioned, or thousand, of those from an of antitrust point of view it is less than 5%. even if antitrust policy is tightened and it may well be, i do not think that will affect the broad volume totals.
in certain industries it may have an effect that i do not think it will affect the broad subject touse those uncertainty i think is quite small. jonathan: last year was a big year but it could've been a lot bigger because some of those deals fell through. you just focus on the volume of transactions and not the big monster deals? roger: that is not the way we think about it. we serve clients and take a long-term point of view toward our clients. we try to help them with their strategic objectives and sometimes they involve transactions, sometimes they don't. some of these elements involve defense issues and so forth in additional to conventional m&a. whatever the client is thinking about, wants to do, we are trying to help them. whether that involves a small transaction, a large
transaction, or not a transaction, that is the way we think about it. we do not think about what we want to work on that might happen, we want to work on what the clients want to do. jonathan: roger altman, always a pleasure. the opening bell is next on bloomberg daybreak. we are counting down following the jobs report, the biggest wage growth since 2009. equities, futures flat. yields lower by two basis points . the dollar marginally stronger but not much. the cache open is next as we wrap up a rough trading week for equities. ♪
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positive by a single digit. eight straight days of losses. willy finally snap the losing streak? yields, lower on treasuries by 2 basis points. the pound with the stronger for the sixth straight day. in 44.14.s over alix steel? alix: relatively unchanged. three tents of 1%, still waiting for that to open. 20 point 82 is the level. the longer-term moving average. announcing around that for a few days. we have been seeing 8 straight losses for the s&p. 2008.en't seen that it's if this is another down day it would be the first nine day
losing streak since 1980. not helping markets is crude. off 1% on reports that saudi arabia threatened to increase output if other members did not agree to a cut. marathon is down 2%. chevron down .4%. this agreement is whether or not .pec can agree to a cut goldman says little probability. they give america and citigroup see the potential for a cut. crude is not helping markets or energy stock. thethan: let's get back to october jobs report where we saw 161,000 payrolls for october, the expectation was 173,000. unemployment dropped to 4.9% here and wage growth, two point 8%, the best since 2009. steady as sheck
goes autopilot towards december 25 basis points? rick: this is a solid report confirming the big winner. the thing the fed has been waiting for, that always lags his wage pressure. 2% year on year wage growth is pretty impressive. surprising on the election, the fed is going in december. it is an interesting dynamic. you will encourage the dynamic in the bond market and it has little to do in terms of economic data. but people have done all week in the equity markets and volatility market, people have said there is more uncertainty and i will try to manage around. that is why long u.s. interest rates are railing. i would have gone the other way. less on the data but more on what has to happen if there is a risk off dynamic next week. alix: what is perplexing is that
longer-term where at slow-paced economic growth. payrolls versus u.s. gdp. .dp is orange payroll is white yes they are stronger, but gdp is stuck. how do you explain this economy? rick: that is a long story. -- ink the u.s. economy think we are hiring an incredible amount of people. if we added a larger number you would've had the 38th straight month of over 8 million jobs created. pretty unbelievable. people lament, why is that happening? you have a global headwind. we cannot run on the economic growth that we had historically. technologies having an influence on output that compresses what are the reported gdp or economic
data. the economy is healthier than that data would suggest as evidenced high the fact we are hiring so many people. car and retail sales were slowing and housing sales were impressive in today's economy. mentioned the long and rallying. i do not want to read too much into the intraday move, but there is a bias in the market that we see time and time again. what does it tell you? rick: if you look at the front end of the yield curve, the front end interest rates are not moving a lot. the markets are priced in a virtual certainty of the fed moving in a gradual way of the next couple of years. i used this quote the other day where we are certain about where the front in of the yield curve is and i related it to my golf game and the yield curve is like my driver, it is all over the place.
if you think about what happened, more evidence the economy is really inflating. if you take the bottom tile in terms of employment, year on year 4.4%. if you think minimum wages will keep going up, so, you do a lot to interpret overstating today's price action. what people are doing, the risk off expressions, the yen, vix, long end of the yield curve, a lot of people are tactically thinking about how do you manage risk into what could be an uncertain outcome next week. david: blackrock's rick rieder is staying with us. jason furman is the white house advisor.conomics rick rieder call this a solid jobs report. what is your reaction? ck had it right when he
talked about wage growth, the central thing in this report. 2.8% over the last year. the fastest rate since the financial crisis. we continue to create jobs. the unemployment rate is down. broader methods of underutilization are down even war. we are pleased. david: we have to look forward to next tuesday and what comes after. you're looking to the end of the obama administration. what job situation will you hand to the next president, whoever he or she may be? jason: a better job situation then president obama walked in with. we were losing 800,000 jobs a month. we are in a solid position now. wage growth is making consumers more optimistic. they are spending money. that is helping to propel the american economy forward and giving them momentum. we feel good about that we took
something that was broken and are handing over some again that are shaped. alix: there's still weakness in the job market. 6 million americans want full-time job. there are part-time and cannot find full-time work. but you say to those people? jason: in the recession, you saw we went to a terrible recession and are not all the way healed. one place where we have scarring is the part-time workers. since we started creating jobs, all of the jobs have been full-time, not part-time. there are still some people left who would love full-time work. we saw more full-time work. we saw the part-time rate come d own. david: expand on alix's question. write your memorandum for the
next administration. what is on their to do list? jason: strengthening the economy in the short and long run. infrastructure spending is a big part. we have seen the wage gains because minimum wages have gone not at the federal level. ruth like to see that happen to build on wage gains. talking about what you can do to raise wages in the long term. the best is education. those are three of the many things the next administration can do. we will take care of tpp in the lame duck. thank you for joining us. white house counsel of economic advisers chairman. what does the jobs report mean to the last day of the trump campaign? we will discuss with a top surrogate -- trump surrogate. this is bloomberg. ♪
alix: this is bloomberg daybreak's. i am taylor riggs. later today elon musk in the global head of fx strategy at -- later today, the global head of fx strategy at deutsche bank. jonathan: from new york this is bloomberg. i am jonathan ferro. we are 11 minutes into the session. equities go nowhere, the dow doing nothing. in marginal positive territory because we have had 8 straight days of losses and the potentially longest losing streak since 1980 if it becomes 9.
a couple of earnings and movers. we need to go to abigail doolittle. abigail: we have earnings winners despite the flat earning. is higher. they needed adjusted earnings of $1.05 per share. revenues grew by 4%. at the little research, they say what is notable is that local media group i 29% driven by strong political standing. an anomaly. and an upside potential for cbs going forward. starbucks, shares are higher on a better than feared fiscal fourth-quarter. the company made $.56 and adjusted earnings $5.7 billion in revenue. after 25 straight quarters of putting up 5%, in july they put up 4% called. same for this quarter.
they are adjusting to a somewhat slower comp. in the bloomberg and look at g 4409, the stock has been trading in the range of uncertainty over the last year. this is typically bearish suggesting the stock could breakdown. we are seeing revenue in our quiet shooting higher suggesting starbucks will surprise to the upside in quarters ahead. alix: in 4 days we might know who will be the 45th president. with the october payrolls falling short and a looming interest-rate hikes, hillary clinton and donald trump have different views on how to grow the economy. here with us is rick rieder. joining us is the senior economic adviser to the trump campaign. we want to start with you. it was really solid reports.
lead game was huge. labor force participation telling down, implied max employment. what can the trump say, what was the negative? >> that household survey found a decline in jobs. the survey where they actually contact workers and ask if they are working. alix: part of that was seasonal with hurricane matthew? >> maybe there was bad news. it is adjusted. the growth over the last year has been 1.5%. there is no sign that that is being lifted. there is not enough change in policy. the emphasis is that donald trump is saying we will have policy changed to allow small businesses to grow faster. that means regulatory changes, tax, energy, trade policy. hillary clinton is saying this is good enough. jonathan: we aren't going to pretend like this is a weak
jobs report, are we? david m.: you can't say that. in,000 more people are not the labor force. the unemployment numbers are not counted. the official numbers leave out billion's of americans who would love to have a job if there were only jobs available. jonathan: i just want to establish the basis of the discussion. every expert that has been on in the last hour said that is a strong, solid jobs report. some of the best labor economists in the world said that a strong. you said it is weak. i want to understand why this october report is so weak. david m.: isn't this the election? reports an establishment this is this is good enough. the blackrock went up. it is too high. this is not a good labor report. the fact that lots of phd
economists have jobs and say it is a good report is part of the problem. challenge the consensus because it is it right for most americans. alix: you have hispanic unemployment following .7%. and growing at the fastest point. that looks like a max employment scenario. david m.: the labor force participation rate went -- alix: down and employment went up. you could interpret that as this is as good as it is going to get. david m.: i push back that this is maximum employment for the u.s. economy. you have too many people, many 25-54, theng people, people that should be working in the economy, the participation rate isn't rising. they're not finding jobs. they do not have the skills.
small businesses are not doing the job creation that happened in a normal recovery. david: you think we could be running hotter in the labor market? a more robust growth in the labor market here it could you render it that much harder without peeking against inflation considering where productivity is? david m.: absolutely. we are talking about a 4.9 unemployment which leaves out millions of people. i don't use the word "hotter." we could run a better economy that creates more jobs and wages. wages are below what they were in 1973 for the average american. this is not a good economy. it is not an issue of making it hotter. only the federal reserve talks about this being a hot or too hot economy. for the average american there is no sense that this is a hot
the economy. alix: what do you think? rick: there are things that should be done with unemployment and slack in the labor force. that.hink tax to do i do think bringing money trapped overseas. there is really smart thoughtful fiscal initiatives. i do not think voluntary policy will do anything. you can get rate to move up and it would be helpful. if you say "it is pretty impressive." when you take the global economy and you are not getting much of a tail from the globe and you have a demographic tailwind, we use the headline number for payroll and growth, but we revise up. there are a lot of things that can be done. a tremendous amount creating fiscal initiatives. we think of where we are in the .orld it is pretty good relative to expectations and the weight component, it is pretty solid. david m.: over the past year gdp
has been 1.5%. the obama restoration it has been 2.1% gdp. the first president not to have the year with 3% growth. not a single year. that has never happened before. thathould have policies are trying to achieve faster growth. achieve 4%olicies to or more. hillary clinton is saying 2% is fine. i don't think the discussion needs to go much beyond that. do you want to percent or 4% growth? alix: why do markets react poorly when trump is gaining in the polls? why the selloff in equities and the falling dollar? david m.: the same media that wants to say this is a good jobs report -- jonathan: i am not trading dollar-yen on this. let's be clear. stock market has
been going up without earnings going up. did you see the starbucks graph? people are trying to pay more when earnings are growing. everyone has said we have reached the limit of that valuation. we have had a small decline in equities. they want to blame that on donald trump. that doesn't make sense. if trump has more growth over the next three years the equity market will like that. that is what all americans should be trying to say. ll lots of people in the labor force to make in our cities a better place. we have to do that. jonathan: david malpass on the positioning of the media, dollar-yen, and all of that. rick rieder is sticking with us. coming up, bloomberg markets with vonnie quinn.
vonnie: job reports and if the election is a distraction or if it is moving markets. hisd el-erian will give us opinion. he says nothing will derail the fed unless we get a major upset in the election, in terms of the markets being upset. talking with a portfolio an mahoney. bee of the stocks that will affected by the results of the election. and we will be speaking currency markets when you see the movement in turkey in particular. david: the turkish lira is going down significantly on reports that they have arrested the 2 cochairs of the kurdish political party in turkey. there were reports that officials were rounding up leaders of the kurdish party. this is in the wake of the attempted to. are notequities
capor: dallas fed president playing will speak in mexico city. 4:00 stanley fisher will speak at an imf event in washington. watch our interview with robert kaplan with michael mckee in mexico city at 3:10 p.m. eastern. david: that is coming up today and we are focused on next tuesday. rick rieder last word, how are you positioning for next tuesday? rick: what are the broad themes? where are we going generally? you saw a re-inflationary dynamic. how do you get yield into the
portfolios? front part of the curve yielding assets like the field market in the front and. when you think about what we did this week, we are creating what looks like more of an uncertain environment with some tactical positioning using long and interest rates and volatility markets that have been pretty inexpensive to manage or risk. there are big seems to position around. we like emerging market. there are times to scale back and re-add. as people are tactically positioning, you could have a spring-loaded effect after the election in terms no one wants to take risk, i won't buy anything until we get the news. it will be fascinating on if you unlock the animal spirits when you get the resolution. alix: what is the cheapest way to hedge? rick: volatility markets have spiked. rate volatility markets have an
inexpensive relative to history. currency volatility is not that high. volatility is not that high. the interest rate market is a pretty good place. as you get into the news, you may want to think about shifting those around. tie for thered election next week. that wraps up this program, 26-minutes into the session. equities, lower on the s&p 500 with the potential of the longest losing streak ends 1980. we wrap up with bloomberg markets next. from the team, have a great weekend. ♪
vonnie: we want to take you from new york to london to washington, hong kong, and pakistan. here's what we are watching. jobs day in the u.s. and payrolls grew by 160,000 in october and wages improved. we break down the report with ian shepperton. mark: it has been a wild week in the u.k. as the challenges of executing brexit come into full view. we discussed the dynamic between the high court, westminster, and 10 downing street. vonnie: the final days of the u.s. presidential campaign 2016. hillary clinton has the upper hand in early voting. donald trump is demonstrating strength in iowa and ohio.