Transcripts For BLOOMBERG Bloomberg Daybreak Americas 20240714

Fed. David today is jobs day. Last night, july 4 celebrations, including in boston led by alix steel and carol massar. It does strike me as i talk to you over in europe that one of the really iconic moments is an overture written by a russian composer, tchaikovsky, about a european war in 1812. It is kind of ironic. Incidentally, i remember trying to play that. With all the cannons firing, very difficult. But i digress. Seeing the market may be not hoping for them many fireworks. Lets have a look at the data right now. S p futures pointing downward. European equity markets a little bit sluggish. The euro is a little weaker. German data came in disappointing. Yields on the u. S. 10 year around the 1. 96 level. Weve seen selling in stocks and bonds in the european morning. Ive put iron ore in the data check today, not oil, because we seem big drops in iron ore in the Asian Session once again. It has been dropping like a stone. Story ise iron ore really quite something this morning. It is jobs day in the United States at 8 30 this morning eastern time. Sunday, greek voters go to the polls in snap elections, with the Prime Ministers job on the line after disappointing results in the european parliamentary elections. On sunday at 11 00 in the morning eastern time, the kickoff of the final match in the fifa womens world cup, with the reigning womens world team looking to defend its title against netherlands. We are joined by bloombergs economic chief u. S. Economist, and mark cudmore in london. Lets start with the estimates. Lets talk about what everyone else thinks and what you think. Consensus is about 160,000 for the number, so it edged a little bit lower in recent days. We are at 150,000. That is where we issued april a merry forecast after the prior jobs report, which was a pretty disappointing outcome. We saw just 75,000 in job gains back in may. The net take away was a zero number for job creation. David youve written that often, it rebounds after disappointing numbers. Carl absolutely. Since 2014, there have been four instances where we had job gains fall below 100,000 on the initial print. In those instances, we always got a very strong rebound. The weakest rebound was about 196,000 earlier this year. On average the rebound was 240,000. This sets you up for getting quite a dramatic rebound if the economy is behaving as it did in those episodes. We think things are a little bit different because this is not just a sisters who will sleep not just a statistical fluke, but heightened anxiety of a whole confluence of factors. For that reason, we look for a more moderate recovery this time around. Anna lets bring mark into the conversation here in london. From our perspective, the whole morning has been gearing up to this u. S. Jobs report, which falls on a day where we see quite low volumes. I think that bonds and yields have to be where you concentrate. Yes, equities are at a record high, and that gets the headlines, but the s p 500 is only less than 2 higher than it was on april 30, so really we have not done very much in equities. Weve gone nowhere. This are seeing incredible surge, so theres this asymmetrical reaction today that a beat will see more and a miss will cause bonds to fall further. Anna we need to track the weakness in the global data once again. Ive got this chart on the bloomberg best shows the manufacturing orders and the weakness weve seen. This came out early in the european session. We see that bond yields tracking lower and lower in recent days. Its mark you are not in recent days. Lower. Ing lower and mark even if we get the odd bit of good data, it is just about matching expectations. This has been a global theme of deteriorating data faster than economists are forecasting. Very tied one that is into the trade war and china in particular. The message it sends is exceptionally worrying not just for europe, but for china and the Global Economy. This just enhances my general bearishness on Global Economic growth. David theres a real contagion in bond yields. They are gone acrosstheboard not just in europe, but everywhere. Is it because of china and trade concerns . Carl i think it is slowing Global Growth in general, of which a big part is weaker Economic Activity in china, of which a big part is the result of the trade war and trade frictions being introduced into the system. This does raise an interesting question, however. The outlook for the u. S. Is not giving all that much. When you look at the decline in u. S. Yields, you have to ask yourself, is this really due to the economy becoming much sicker, or just a global trend . If it is a global trend, we should be less worried. That might explain why equities are still reflecting pretty rosy domestic fundamentals, and the fed easing or recalibration will really just have to be keeping in step with what global Central Banks are doing. David that takes us to our third story, which is Deutsche Bank. This sounds like it might be the real deal. Maybe as early as this weekend, they will decide on major restructuring that will affect u. S. Operations for 20,000 employees. To what extent is this really a broader problem for european banks, given you have negative deposit rates . Mark i think this is just another marginal story and an ongoing theme of decline in the european Banking Sector. They had real problems for many years, and eight bank has been at the forefront of those problems. 10 years ago it was the leading europeanhe sector. I think it is symptomatically the growth slowdown in europe. Anna dealing with negative Interest Rates is one thing. Banks are also having to do with a lack of volatility in some asset classes. Fx is moaning about a lack of volatility. A be that is a good thing for the Global Economy. It doesnt make money for banks, though . Mark it is goodmark for investment and businesses. Fx volatility helps global trade. Theres only a small sector of bank profits. If we went into a world with no fx volatility, overall the World Economy would be a much better place. David which is the symptom and which is the disease . You need a healthy Banking Sector to have a healthy economy if then the other hand, economy doesnt look good the banks dont look good. Carl the lesson here, madam lagarde, if you are listening, is negative Interest Rates are not an effective policy tool. If you are hamstringing the Banking Sector, you cant expect the economy to be healthy as a result. I know it is politically loaded to say help the banks to help the economy, but as the ecb is considering moving even more into negative territory, they are only going to exacerbate this problem and not improve the economic outlook. Thats why you see longerterm seefollowing longerterm yields falling. David i think she got the message. Carl riccadonna and mark cudmore, thank you very much for being with us. You can find all of the charts we just used and more by running gtv on your terminal. You can browse recent features and save our charts by running gtv. Coming up, we stay focused on jobs. Thats next. This is bloomberg. Viviana this is bloomberg daybreak. There will be a change at the top of bmw. Ceo Harald Kruger telling the german automakers board he will not seek another term of office. He is set to leave next april. Hes been in the job for more than four years. Globalar, bmw lost the luxury car lead to mercedesbenz. Quarterly profit fell by more than half at samsung. A Global Industry downturn and trade tensions hurting demand. And highend chips smartphones have been some of the hardest hit components. U. S. Tariffs took effect in may. Stylena, a new nasdaq stock trading venue opens july 2. The socalled tech board is seen next alibaba from choosing elsewhere to list. David u. S. Employment has been the bedrock of the economy, but may numbers were disappointing, which puts all the more focus on what happened in june, with expectations for a bounce back, but still a somewhat slowing pace of jobs growth. We welcome here in new york john stoltzfuz, oppenheimer chief investment strategist, and over in london, barings Global Investment strategist. What are we looking for . John i think we see 160 thousand, right with consensus. David but it is not as robust as it has been. John it would make sense, based more than 15 months into a trade war that is beginning to show the effects of higher tariffs, and a normal slowing that can occur within an Economic Cycle that i would say is in the midcycle david . One of the reasons we all the midcycle. David one of the reasons we look at the jobs so closely is because of the fed. The white line above is for september, the blue for after september. This says at least one cut by september and two after that. John i think the fed does nothing and july and will wait over the summer to see what it will do in september. Any developments that would give us an idea of the trade resolution could even see the head of the fed just forget about it. No hike. David lets get the thoughts anna lets get the thoughts here in london. The market seems to be thinking that july is happening. What are your thoughts on the fed when they come . Think it is actually not dependent on the data whether they would do a cutter not. I think the market is expecting do a cut or not. I think the market is expecting they will move on to the dovishness they had in the last talks. I think it would probably mean they will do a cut in july of 25 basis points, and then wait for more data. Anna john, give us your thoughts. I was thinking at the top of the show about the relevance of backward looking jobs data. When youre talking about the need to do an insurance rate cut, why are the markets and investors joining the dots between the data today and what the fed does in july to the extent that they are . John i think it happens to be the play that the market is focused on right now. The market is concerned about the slowing it has seen as part of the Economic Cycle, and that is also affected by the trade war that has gone longer than many have expected. Sensitivity, the focus is all on the fed come up on the fed, but we wait to see what happens with trade over the summer, and we think the fed will probably do that. David we had three records set on low volume. How is the stock market likely to react to good or bad numbers coming out of the jobs . Ghadir i think because markets have made new highs before the holiday, markets are more likely fully reflect in the markets, and the market is likely to do very little today. I think it will probably end up but we low down day, dont really care about a daytoday basis. What you really need to think about is our corporates healthy . Arecorporate earnings corporate earnings likely to reflect a rally . Alstom you are still all guns blazing for the u. S. Equity market. The s p 500 touching new alltime highs this week, but also alongside its equal weighted cousin, weve given you a sense of the brights in the rally in the u. S. Of the breadth in the rally in the u. S. Ghadir it is actually quite narrow. , and softwaretech and communications. It is a tech driven rally and a growth driven rally because of the bond yields in places like europe. Going forward, it is going to be the companies that give you sustainable earnings. Some of it will be in the tech sector that will be the driver of the markets Going Forward, but it is not u. S. Equities that we are really positive about because more emerging and muchse equities have had more sensitivity to what is happening with trade wars, and that is where you will get combination of dovish Central Banks and growth. David my question is why isnt wall street listening to the companies . The companies are revising downward their earnings as best they can. Ave got a city global citi global earnings revision down. Don some of that has to with the relation between bonds and equities, but i think if you look at the wei screen on the bloomberg, you see a heck of a lot of green. We think it must be politically connected investors seem to think theres going to be a deal. And when you get a deal, youre going to get a ramping up of growth estimates around the world, both in terms of economic as well as corporate earnings. This is spectacular. Just consider that the s p is up 19. 5 year to date. , but everything is up double digits except energy and health, which are near 10 . Investors dont just throw money at the market. Weve seen that in the last 10 years. Ive been in this for 36 years now. This is the most extraordinary bull market. Andets tested and retried, the resilience would seem to be that tech is invigorating most of the sectors. David so it is all up to the oval office in the end. John im afraid so, david. [laughter] ofid John Stoltzfus cooper ofr and ghadir barings will be sticking with us. Anna coming up, we look at Deutsche Banks turnaround planned with 20,000 jobs on the line. How big will Deutsche Bank be in the u. S. After this . This is bloomberg. Anna welcome back. This is bloomberg daybreak americas. Deutsche bank braces for its latest overhaul push. Is christian sewing reportedly looking at cutting as many as 20,000 jobs worldwide and pulling back in Investment Banking. These are some of the highlights of what we are expecting them to do. U. S. Job cuts could go deeper. With us now is Bloomberg News steven arons. Seems to look at what be a very busy weekend for you in frankfurt. A longeen talking for time about restructuring coming at Deutsche Bank. En it seems to be heading for a climax, on sunday presumably. Sunday is what we expect to be the most likely date. ,he cuts will be quite drastic especially in the u. S. , so they should brace for something really heavy to come their way. Where do we expect the big cuts to fall . This has been a business trying to retreat from u. S. Equities and other parts of the Investment Banking space. Are there going to be parts untouched by this . The european operations . Ee lessgoing to s job losses in europe . Steven presumably, yes. They have been turning the bank away from a wider global footprint towards catering to european companies. The likely scenario will be a much stronger footprint in europe and pulling back from businesses around the world. In u. S. Business, equities and rates will be heavily affected, but the cuts are likely to extend beyond that. Corporate finance could be a target, and more parts of fixed income trading. Sewing is a big fan of action bank, so that may be a part that it is sort of exempted from those cuts. Anna thanks very much. Lets get back to our guests, Ghadir Cooper from barings and john stoltz swiss from oppenheimer and John Stoltzfus from oppenheimer. In general, european banks pulling away from u. S. Operations you see as a trend. Ghadir i think what we havent seen in the u. S. Im sorry, what we saw in the u. S. After the financial crisis, the banks to be able tolves compete Going Forward, they have been able to get themselves into a footing where they can go and do business in a way that gets them the right outlook knowing forward on return on equity. Bank try a lote of things before they got to this thing. Anna under a lot of ceos. Ghadir that is also true. They try to do something now that is actually cutting to the level that will enable them to compete, especially as technology will be a very big competitor Going Forward. David john, at what point do european banks become attractive because they are so cheap . John thats been the question of the last five years. Every time people think they are becoming attractive, Something Else comes forward. Its taken the erp and banks a long time to come clean with their problems, much longer the european banks a long time to come clean with their problems, much longer than the american banks. It tends to be a cultural problem. They are very secretive with connections to their governments. David it is named Deutsche Bank, after all. John and ghadir are going to stay with us. Up next, we look at the elections in greece and the challenges facing the euro zone. This is bloomberg. When you rest on a leesa hybrid mattress, bedtime is no longer simply the time you go to sleep. Its time to switch off and catch up. Enjoy me time, and we time. 40 winks or 8 hours solid. The leesa hybrid mattress combines two technologies to give you deeper rest and rejuvenation. 1,000 pocket springs provide edge to edge support, responsiveness and comfort. While premium foams relieve pressure, keep you comfortably cool and limit motion transfer. Leesas hybrid mattress is not only recommended by experts, experts choose to sleep on it too. Try it yourself in any west elm store. Or order online and well ship it to your door so you can try it risk free. The leesa hybrid is american made. Built to last. And, because Everyone Needs a place to rest, we donate tens of thousands of mattresses to those in need. Live healthier, live happier by resting deeper. Get 15 off, and 2 free pillows. Go to leesa. Com today. Anna this is bloomberg daybreak. Im anna edwards, in for alix steel. Alix is on assignment. Byopean equity markets down 4 10 of 1 on the stoxx 600. U. S. Futures also pointing lower. Of course, we are waiting for the jobs report. Kind of in a Holding Pattern waiting for that. The euro against the dollar is a little bit weaker. Weak data on the factory front out of germany. Yields come the trend has been for ever weaker bund yields. We have seen that fairly flat this morning. Iron ore has been in focus. In the Asian Session, prices coming down after the strong rally we have seen in recent days to a fiveyear high. David now lets get an update on headlines outside the business world. Viviana hurtado is here with first word news. Viviana President Donald Trump revamping the traditional fourth of July Celebration on the National Mall in washington, d. C. And militaryanks, flyover, and a vip area for his supporters. It also included a 45 minute president speech. He did avoid overtly political themes. U. S. Special forces has led to a diplomatic crisis. Offl marines seizing a ship of gibraltar carrying iranian oil to syria, in violation of european and u. S. Sanctions. Iran declared the action illegal. They some of the British Ambassador to explain what happened. Spain says the seizure took place in water it considers its own. In greece, the populist experiment that brought Alexi Tsipras to power is expected to come to an end. On sunday, voters are likely to give the Government Back to new democracy, one of greeces two traditional policies. Global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. Im viviana hurtado. This is bloomberg. Anna thank you very much. For more on these greek elections we just heard a little about, lets welcome our bloomberg reporter from athens. Pollsseen here in opinion that it looks as if the greek people are going to give it away from Alexis Tsipras and more towards an onto been or friendly, taxcutting an entrepreneur friendly, taxcutting centerright. Reporter hello. It looks like greeks are turning to more business friendly new democracy as they are hoping that investment is going to flow into the country and bring more jobs, and somehow this is going to kickstart the economy. Dont forget that tsipras was elected with a mandate to overturn policies, and instead of that, he signed a third bailout and fully implemented it. Anna tell me a little bit about how the Greek Economy is faring as we head into this election. Unemployment still very high by european standards. Eleni it is indeed. That a newthings pledge includes is a growth of 4 for the u. S. For the Greek Economy. This is going to be a huge challenge for him because with the surplus targets and the creditors in already vessatisfied with tsipras mo and the handouts before the elections, hes going to have to find a way to balance between the creditors demands and giving back to the greek people that root for him. A 4 analysts say that growth target is not that realistic. It would have to mean that lots of money is going to flow into the country, and this is not easy to make it happen. Anna thanks for your analysis. Repa joiningeleni ch us from athens. Lets bring in john stoltz fors John Stoltzfus of oppenheimer and Ghadir Cooper of barings. The Greek Stock Market is actually the best year for 2019. Is this just a banking story and recovery story . What is happening . Ghadir it is actually a combination of all. Greek banks have been the driver of this rally. Some of them have gone up 90 this year, and it is just a reflection of two things. Economy all, the greek is doing well. There is need for capital that is not as high. They can survive on talk of a bad bank. That was helped in the last two comingor so, with yields down massively. That is always healthy for assets. Now the markets are going to look for what causes the next leader in greece, and what is the Business Environment we are going to be in Going Forward. David it looks like greece is doing pretty well, germany not so much. Four years ago you would not think we would have that. Factory orders came out overnight and were very disappointing, down 2. 2 . 2 10stimates were down of 1 . How much of that is down to trade . John we think a lot of it is gdp relies but that about 50 on exports. Germany is a major seller of all kinds of things to china. Naturalwing in china, a knockoff effect is to cause damage to the german economy, particularly the area manufacturing. David germany has been the driver for. The european economy overall where is growth going to come from driver for the european economy overall. Where is growth going to come from . John i would imagine contributions will have to come from other segments of the european economy, whether it could be perhaps from spain or france. I think right now the real kicker will be any kind of a trade deal will just rewrite everything for germany at a more positive outlook. We think a trade deal is likely. Youve got 2020 elections for President Trump, an opportunity to get this trade war off his agenda and move on to drug pricing and infrastructure. Problems ugh president xi has got enough problems with what is going on in hong kong. That is likely to be a canary in the mine related to many people around the country that are thinking they really dont like what they are seeing from beijing in terms of a tightening of the culture versus an economic model. Anna as we see concerns about Global Growth, john talking about china having repercussions in germany, and bond yields just keep going lower, this is all a function of market expectations, further rate cuts, further easing from the ecb. What do you expect the ecb to do to tackle this slowdown in europe . Ghadir that is the problem because you are asking about what the ecb should be doing, is external it factors, some of it is Technology Change with the car industry moving into cleaner vehicles. What we need to ask is is that the right experiment Going Forward to bring the european economy out of the worries about a recession . That is basically what the bond yields are talking about. Wouldnt fiscal stimulus be a better way of tackling this . You cant really stimulate the economy. People and businesses do not want to borrow. That is not how you are going to stimulate. Anna a lot of the conversation in europe is about whether germany should spend more. Do you see room for a big fiscal driver for the Global Economy as we see Monetary Policy being stretched to its limits . John i think it is inevitable that we will likely see some fiscal aid come into the mix on a global basis. I think weve already begun seeing that within china, and i think it will spread around the world and gather momentum. However, one thing we would like ,o point out is ever so often the economy runs through a slow i and is compounded by dont want to beat a horse into the ground here but by the trade war and the knockoff effects, the Collateral Damage to the trading partners of both china and the u. S. We have to think that fiscal policy will play a role. Monetary policy has done just about as much as it can. One thing is since the crisis, Central Banks around the world have become more adept at challenging the trends that are cover inflationary. That are counter inflationary. Businesses are more powered by inflation every day. David tell me about european equities. As you know, the stoxx 600 has actually had a pretty good year. It has been climbing. This compares it to sentiment. It looks like investors may be buying, but they dont believe it. Ghadir actually, what is happening is because bond yields have been going down and becoming even more negative, investors are looking at where you can get future growth. Moves on the trade war and having very china facing industries within tech particularly sitting in europe, that is what the markets are saying to you. I am going to be forwardlooking rather than backward looking. I want to be in riskier assets because that will give you the best money Going Forward. Anna clearly this has been a very busy week for President Trump, calling for weakness in the currency. He thinks the europeans and the chinese have been manipulating their currencies, and that the u. S. Should somehow join in. Do you think if there was a further ceasefire or progress in trade talks, maybe tariffs being lifted, would that push the dollar down . John i think a resolution to the trade war pushes the dollar down. I think the truce actually strengthened the dollar because nearterm, it strengthened the ironicallyl, so both would strengthen, but other currency moved lower. We would think it is a resolution that brings currencies outside the u. S. And china higher and brings down the dollar off its high perch to some extent. David presumably for european stocks, it is good to have a weaker euro compared to the dollar. Fears are that you cant get the dollar down, but every other central bank around the world chases for lower yield. Ghadir absolutely. If you look at the 10 years across the world, the u. S. 10 year still gives you a positive yield carry, and that actually should be helpful from our point of view for other emerging currencies. This year isen that some of those currencies have done well, the ones that have positive carry. We think the way it will play out Going Forward is that people will start worrying much more fort growth and will look where they can get growth. If we have resolution to the trade wars, a lot of that will be in emerging markets. David thank you very much to John Stoltzfus, oppenheimer chief investment strategist, and ingsir cooper, bar global head of equities. More next in todays wall street beat. This is bloomberg. Viviana this is bloomberg daybreak. On bloomberg the National Economic Council Director larry kudlow. Last year, iag tried to buy norwegian, but abandoned the effort. Buy germanl will lighting companys rim lighting companys rim premium. Sram at a 20 billionaire chris klein died in a helicopter accident off of the bahamas. He was known for reviving illinois mining industry. Chris klein was 60 years old. Im the vr art auto. That is your im viviana hurtado. That is your Bloomberg Business flash. David we turn now to wall street beat for three things wall street will be covering this morning. First off, Deutsche Bank is said to be planning more u. S. Jobs cuts beyond its equities and trading businesses. Plus, socgen retreats for private banking. Societe generale is said to be planning a sale of its division. And Samsung Struggles with a slowdown. South koreas Largest Company size quarterly profit more than halved as it faces global downturn in demand for its chips and smartphones. Joining us is sonali basak. Welcome back again on Deutsche Bank, but maybe we are getting some answers over the weekend. Sonali thats right. Especially in the u. S. , where we may see the biggest amount of job cuts. Anna when we are talking about the Banking Sector, lets linger on the Deutsche Bank story. How big will Deutsche Bank be in the u. S. At the end of this process . Sonali much smaller, especially in Investment Banking. The cuts are supposed to be well beyond the equities and rates division, which we have reported on that links. What they are going to keep is going to be a big question. David they bought bt back in 1999. What is going to be left of deutsche . They are competing with a lot of small banks in germany that dont even have to make a profit. Sonali that is certainly true. They do want to keep some of the u. S. They have good fixed income business, a sizable one. They also have a private bank theyve been trying to expand. We are also going to see some major leadership changes at the top. We want some clarity on that, but we also want to see how they are going to oversee the reconstruction and who will be leading it. Anna onto that socgen story, they are planning a sale of their u. K. Business this a few years after they ramped up the size of that business with the purchase of a bank thats got an incredibly long name. Now they want out of this sector. Sonali it certainly tells you scale matters a lot in this business. We seen ubs and Credit Suisse double down, but also issue warning signs that the European Growth in billionaires is slower than perhaps asia and the u. S. If you dont have a lot of skin in the game, maybe it is not the time to be in it. Anna meanwhile, Credit Suisse moving in the other direction, trying to ramp up a little bit in u. K. Wealth. Sonali exactly. That sort of scale is the big question mark. For socgen, this is tens of billions of dollars. Four credits suisse and ubs, this is trillions of dollars at play. It tells you maybe they are more willing to double down where others are retreating. David lets go to samsung and see my connectors. They came out with their and semiconductors. They came out with their earnings, down 15 after a onetime gain of 800 million. This is not a good story. Sonali and can you believe that profit more than halving from the previous sector is still better than analysts expected . This is a trade and tariff story because they generate so much money from china as well, but you are seeing koreas Largest Company impacted. David particularly with semiconductors. ,onali i think a lot of people like a great story out yesterday, see this has a very bad sign for the second quarter. Some of the analysts had a bit of a bright spot for it. Anna i have a chart here that shows samsung profits coming down very clearly. This business is the biggest in korea, so it has significance there for an economy that is so exposed to the global slowdown because the trade tensions. Sonali and also if you remember, it is about chips, but a while ago they also had issues with their smartphones as well. They are seeing issues on both sides. And it turns out that south korea imports a lot of electronics from japan. Sonali right, so it is not even just a u. S. china question. One thing keeps coming after another. Well see how the stock reacts to that also. David as you pointed out, somebody in Investor Relations did a good job. [laughter] sonali it says something about apple as well because they might have been another customer that had to deal with this 800 million gain with a loss on the other side. David thank you very much. Coming up, but i am watching. British authorities seized a supertanker carrying a rainy and oil by gibraltar, and carrying iranian oil by gibraltar, and iran is threatening to retaliate. This is bloomberg. David this is what im watching in the United States, but really in your neck of the woods. An oil tanker was trying to make gibraltar,traits of and u. K. Forces seized it, saying it is carrying oil from iran to syria. Anna this was supposed to be going to syria. The irani ends have objected, the iranians have objected, of course. Interesting latest development because yesterday, there was some reportings adjusting that the u. S. Had asked gibraltar to intervene here. The british overseas Territory Government saying today that that is not the case, that actually this is something gibraltar had to do based on the information about where this tanker was headed. David and the iranian government has summoned the British Ambassador. If that werent enough, the spanish are saying we dont recognize british dominion over those sees anyway. That is spain, and you shouldnt be having your Royal Marines boarding ships there. Anna indeed. I understand they boarded by boat and helicopter which sounds like an impressive feat. We probably dont have time in what remains of this program to discuss the british involvement on the rock of gibraltar. David it is fascinating to think about this. Is it a matter of iranian sanctions, or more of a syria issue . Anna this is something that is going to be felt by the people of syria because this is about syria and sanctions. This is because the European Union had decided that there should be sanctions on syria, and as a result, they thought this tanker was heading there and had to intervene. David every time iran comes up, we immediately look at oil. It doesnt seem to be reacting very much. Is that true . Anna absolutely. Yesterday it slumped, and today we are kind of mixed on the oil price. Wti is down, brent is up. Really, Oil Investors watching what came out of the opec meeting, but even that must to cut back on production further. David didnt pay much attention. , torsten slot, Deutsche Bank chief economist, joins us ahead of the jobs numbers out of the u. S. This is bloomberg. David getting the job done. Markets wait for u. S. Job numbers this morning, and what they will tell us in the fed about the academy. European bond yields continued to plummet, with bunds flirting with the ecb deposit rate and greek bonds approaching u. S. Treasury levels. And one more time, Deutsche Banks working on another Restructuring Plan, its fifth in seven years, and this looks to be a radical restructuring with u. S. Jobs and operations on the line. Welcome to bloomberg daybreak on this friday, july 5, with anna edwards in london. Alix steel is on assignment. Coming up at 8 30 eastern, we get the job numbers. Everyone is waiting for those numbers. Anna hoping for fireworks if you are an fx trader seeing low volatility. Interesting too thick about what might move here. Interesting to think about what might move here. U. S. 10 year yields at 1. 9 . Ande get a week number lower expectations for Interest Rates in the u. S. , how low does that number go . David is good news bad news, bad news good news . Does that mean for sure we get a rate cut . Anna if you dont miss by much, does that turn out to be a positive for stocks because markets assume the fed will come to the rescue . Lets look at where markets are as we had towards that jobs number. This is a picture of the market check for you. In theg out kind of flat morning session, but losing footing, down 4 . The dollar has been generally pretty strong, up 2 10 of 1 . Weakness in the euro out of factory data out of germany. I put iron or in as well. , iron orean session going up to a fiveyear high printed steel many factors to call for some action. David it is time now for the morning brief. In less than 30 minutes, its jobs day in the United States. At 8 30 we get to see those payroll numbers. Looking at the weekend ahead, on sunday greek voters go to the polls in snap elections, with Prime Minister tsipras job on the line after disappointing results in european parliamentary elections. Then we have the finals match of the people womens world cup starting at 11 00, with the reigning u. S. Champs looking to defend their title against the netherlands in france. Lets find out what is going on outside the business world. Viviana hurtado is here with first word news. Viviana President Donald Trump revamped the traditional fourth of July Celebration on the National Mall in d. C. It included tanks, a military flyover, and a vip area for his supporters. It also included a 45 minute president ial speech that doesnt normally take place. The president did avoid overtly political themes. He praised the u. S. Military and the american people. A daring raid on a supertanker forces off ofcial gibraltar carrying iranian oil to syria, and violation of european and u. S. Sanctions. Iran declared the action illegal. It summoned the British Ambassador. To. Ask play what happened spain says the seizure british and basset are. To explain what happened spain says British Ambassador to explain what happened. Spain says the seizure took place in what it considers its waters. An earthquake in Southern California opened up crocs in the road, shaking buildings all the way in downtown l. A. It is one of the oldest fourth of july traditions, the sky lighting up last night at the boston pops fireworks spectacular. 10,000 fireworks were launched following a concert that featured queen latifah. The event showed exclusively here on bloomberg. Global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. Im viviana hurtado. This is bloomberg. David thank you so much. Less than 30 minutes to u. S. Job numbers, with expectations that are going to rebound from last months disappointing report. ,e welcome now torsten slok Deutsche Bank chief economist. What is your expectation . Torsten we always thought 160,000. The number one issue for this report is any signs of the trade war beginning to show up, not only in manufacturing, but also outside many factoring and services. David this is a chart you provided, which is all employees as opposed to adp private. Torsten the orange line here shows the numbers out of wednesday. If you look at what they have been doing in the last few months, they have reportedly been slowing down. The Big Questions we have had with clients around the world about exactly this issue is why is it we are beginning to see some softening in employment growth . Its been very strong for quite some time. Will that be a leading indicator of what we see today . The prime suspect the last few months is the trade war. David might there be some distortion because of the census . This happens every 10 years, but the u. S. Employees a lot of people temporarily. Could we start to see that show up . Torsten thats true, but the census hiring should actually be lifting things. David on the public employment. Torsten absolutely. What we have actually seen is a lower number, so theres a lot of forces pulling up and down. Theres also weather issues. But at the end of the day, given so much of the manufacturing problems originating with the trade war, we are a little bit worried about the Downside Risk from that. Anna good morning to you. We obviously look for the main Headline Payroll number is always. What about the other numbers we typically get here . The average earnings and Unemployment Rate . How low can the Unemployment Rate keep going . Torsten the Unemployment Rate is at the lowest level in 50 years, so you look at that and say, what is the problem . The economy is actually pretty strong. The problem is we are facing this headwind of the uncertainty coming from the trade war. What we are really looking out carefully for his to your other point about wages. Other signs of the labor market beginning to show less signs of being redhot, and therefore being more problematic in areas in particular associated with the tradable sector. The tradable sector is really where most of the focus should be today, namely because that has been the main narrative in markets, and why rates have continued to move lower. Anna do we need to see a really weak number to guarantee rate cuts in july from the fed . If you described this rate cut in july as presented if, as preventative, precautionary, insurance measure, maybe you dont need to see weak data to build a case for cutting rates. Torsten absolutely. Saying lets see what the data stash we had saying we had clarida lets wait and see what the data says. It is very important that it depends dramatically on what the number will be today. If it is about 200,000, it will be very difficult to cut rates later this month. David we have an indicator here of what the market is pricing in. It says by december, we will have 6 10, so basically more than a. 50 basis point cut. A year from then more than a 50 basis point cut. Is the market ahead of itself . Torsten it is something in the last month or two, that both the loo and the white lines are moving down, but at the end of the day, the incoming data hasnt really deteriorated much. That is why today is so critical. Do we see confirmation of this chart here that the data is deteriorating . Or was this just a lot of panic about the trade war, which is roughly only about 10 of gdp and employment . Maybe this has not been spreading to the Services Sector and the supply chain as we have been worrying about. You are expecting a 25 basis point cut in july, is there a number that we might see today that could cause the fed to give a 50 basis point cut . One of my guests earlier was suggesting that 50 was what we would see from the fed, and i thought maybe that looks like panic. Do you think the 50 would look too much like panic . Torsten the framework the fed always uses is that if we get payrolls around 100,000, that is enough to keep the Unemployment Rate stable. Payrolls go well beyond 100,000. I would say we need to almost see negative. If it is 80 to 120,000, the fed would say thats where we are supposed to be to keep the Unemployment Rate stable. The economy is not falling apart. It is not overheating. From their chairs, it will still be very important. We need to see significant signs of a slowdown. David 10 roughly of the economy was directly trade related. That is firstorder effect. What about second and third order effects, things like Capital Investments not being made because people are concerned about the trade war . Torsten absolutely. That is why the supplying chain question, have you heard negative antidotes for those supply orders . I am basically seeing a spin lower to the Services Sector. The good news is the u. S. Is very diversified. When you hit just 10 , it may not be spreading as much initially, but have we seen spreading more broadly . Manufacturing ism has been going down, but the services ism has been stable and going up a bit. The 90 still looks reasonably ok, so that is why i think the fed is saying we dont need strong signs of rates going down if the data turns out to be reasonable. David torsten slok of Deutsche Bank is going to be staying with us right through the job numbers. Coming up, we look at the uncertainty on trade. This is bloomberg. Viviana this is bloomberg daybreak. There will be a change at the top of bmw. Ceo Harald Kruger preempted speculation over his future by telling the board of the german automaker he wont seek a second term. He has led bmw since 2015. He faced criticism over falling profits in the pace of how he would build a new generation of electric cars. Quarterly profit falling by more than half at samsung. A Global Industry downturn and trade tensions her demand of the companys chips and highend smartphones. Memory chips have been one of the hardest hit components since u. S. Tariffs took effect in may. The board of Deutsche Bank will decide this weekend on a Restructuring Plan that includes sweeping job cuts. In the u. S. , those cuts will probably go far beyond equities and Interest Rate derivatives trading. Those businesses have been marked as major targets. Deutsches may start informing Staff Members of dismissal on monday. That is your Bloomberg Business flash. David thanks so much. That is quite a story. In your neck of the woods, Deutsche Bank, you have to feel sorry for christian sewing. He has a tough hand hes been dealt. Anna absolutely. Hes not the first ceo to try to take on restructuring at this bank. Hes trying to do something that really turns the tables on two decades of history at Deutsche Bank. Has turned. They are doing something different. They are retreating. You have to big help you have to ask how big they will remain to service their clients. David one thing that struck me just this morning, there was a moment in 2007 or so that it was the biggest bank in the world. Anna indeed. How times have changed. David thats right. Lets turn back to u. S. And jobs here. Economists are the ones that predict hiring, but it is the ceos making the decisions. We turn now to one of those ceos, ravin gandhi, who runs gmm nonstick coatings, which makes coating for Companies Like kitchenaid and pyrex. Welcome back to bloomberg. Good to have you. Lets start with your business specifically and your hiring practices, and how your business is being affected trade uncertainty. Ravin im happy to report we are actually above plan year to date. I think that is great. We are hiring pretty much across the board. A little bit lower in china because of the trade uncertainty. I think that is the big bullet that we so far seem to have dodged, all of the bellicose language out of the administration. What happened in china really scrambled the supply chain. We have a lot of multibilliondollar clients that move production from china to malaysia, indonesia, lowercost countries. That was absolutely an issue that we saw, but thus far the economy looks rocksolid across the board, and i hope it continues. Anna good morning to you. Are you looking at these trade tensions as a President Trump specific phenomenon, or the or at the democratic contenders in the u. S. And saying this trend is going to be here for some time, regardless of who is in the white house . Ravin i think it is i think it is pretty specific to the president , and my view. If there is one thing hes been consistent on throughout his career, hes always demonized globalism and global production. I think that is insane because i know how much america likes to buy goods that are produced more efficiently than they can be here. I think the president made a asia, chinahit specifically, because he didnt think it would hurt our economy enough and would play really well politically. So far, i think hes right. It is going to be pretty hard for the president to lose in 2020. Just look across the board economically, and a lot of people will get their paychecks. If they give him credit for it, despite what the other side thinks, he looks pretty good right now. Torsten in terms of your supply chain and everything you are saying, that becomes really important in particular for the bigger macro picture. Are you hearing adjectives about people are you hearing antidotes about people moving factories away from china hurting employment in the u. S. . Or basically this is not having much impact on the supply chain up to this point . Ravin i think it is having a pretty big impact. Facts mentioned, they are that some of my clients have moved out of china to many other places to produce cookware, bakeware, and small appliances. The president tried to say his policies in 2016 would bring all of these factories back to america. That certainly has not happened. I can tell you firsthand hand, my Parent Company just bought one of my big competitors basins eric, so we are now competitors based in zurich, so integrating. No ceo is going to arbitrarily build a plant in america unless they can make money doing it. That is what capitalism predicts. Besides democracy, i am a big capitalistic guy, and i think that will never change, regardless of who the president is. Torsten which countries do they move to when they move out of china . Theres a lot of talk about vietnam. Is that the place to go . What are the facts telling you about which Companies Already which countries are the substitute . Indonesia,e seen malaysia, vietnam. The business in india was up almost 80 last year, and yeartodate they are up around are so india, i think they about 20 years behind china visavis infrastructure, so i think india is going to be a real growth story. To the extent the president keeps a Good Relationship with the p. M. Of india, they have a lot of potential as well. David weve talked about how trade affects you and your customers. Lets talk about the consumer because ultimately somebody has to buy those pots and pans. We saw various records in the stockmarket on wednesday. One of the records was consumer discretionary. Are you seeing any ultimate effect on the u. S. Consumer buying those pots and pans . Ravin it is amazing, but we really arent. We are seeing prices go up. Some of our clients were caught in the tranche of tariffs that went for forward. We have seen some prices going up. I think it is inevitable that we are going to see prices heading up. That is probably my biggest fear, that a trade precipitated inflationary situation. So far we have all been saying that the sky is falling, but it is not. I think we are watching it very carefully. I would say that people like myself who are running companies, weve all gone through sort of denial and anger and bargaining. We are all in acceptance right now that this is the new normal. This is the president , and him saying something but meaning Something Else, the way that he operates, i think that wave of populism is sweeping the world. If you look at the u. K. , at india, it is a lot of autocratic sort of strong men, and the world once that right now. Anna the president seems to want to bring down the value of the dollar as well. He talks about how the dollar has been overvalued. Weve shown plenty of estimates that would agree with him, but how does that play out for your business . You manufacture outside the United States predominately, but sell in the u. S. And elsewhere. What does a strong or weak dollar mean for gmm . Ravin to his point, if the dollar is weaker, it makes our product less expensive so we can compete globally. I am generally a strong dollar guy. It is a slippery slope when you start wanting your currency to weaken. We are obviously still the global reserve currency. I am not a fan of the president s tweets about whether it is Monetary Policy or what he is saying about the fed. I think it is really strange and america to have a guy trying to control so many things. Americaongterm bull on , whether the president wins in 2020, whether someone else wins. Im sure he thinks it is all because of him, but america has almost 243 years yesterday, whatever it was. We have the most dynamic, reinventing economy, so i think we will be fine, and i think the stronger dollar is a better policy. David ravin gandhi, you are going to be staying with us. We have breaking news from Deutsche Bank, confirming that Garth Ritchie, the head of Investment Banking, will be leaving Deutsche Bank. The vote was not supportive of him in the last general meeting of shareholders. The speculation that he might be leaving is now being confirmed by Deutsche Bank. Not a big surprise. Indeed. Anna anna indeed. To put this in context of the big news over Deutsche Bank the last 24 hours, we are expecting this to be a big weekend for Deutsche Bank. Ceo christian sewing probably pulling the plug to some extent on their u. S. Dreams. Garth ritchie was copresident and head of corporate Investment Banking. We will be looking at other names to be joining that list. David this is speculation now, which we should avoid, but if they are cutting back substantially on Investment Banking this weekend, the question is what would be left for Garth Ritchie to do. Hes a very big figure, a very executive,nking and he is not going to want to preside over a skeleton crew. Anna just how skeletal it becomes is the question over the weekend. Investment bank head Garth Ritchie to leave Deutsche Bank. Christian sewing, ceo, will resume response ability for that part of the business. David we want to come back to u. S. Jobs with torsten slok. Lets talk about the wages. You have another chart that indicates wage growth. Where are we in wages . Torsten wages have gone up quite substantially from 2015 through the end of last year. It has begun to flatten out and dip down a little bit. This is not only a u. S. Phenomenon. This is also a global phenomenon in the euro area, the u. K. , and germany. The trend has started to slightly rollover, so from a central bank perspective, we were worried about the uptrend, but now we are looking the other way of saying it is problematic that wage growth is beginning to slow down. David looking specifically at the United States, although the momenta may be waning, there is still wage growth. That rate is still above the rate of inflation. Torsten absolutely, because inflation has been modestly slowing at the same time. They say gradual rollover at the top, which is giving the excuse for the fed and ecb to talk about more easing being meted being meted. Anna what do you see in inflation from here . We were just having that conversation with ravin gandhi about the future of globalization. It seems to be threatened on a number of fronts. Do you think that is going to be inflationary on a longer time horizon . Slowing gdpis modestly down, so in that sense, the trade war is like many stagnation. Time, it is losing momentum because of the trade war and uncertainty on business planning. At the end of the day, the answer is we do expect that inflation will essentially start to move slightly lower from here , sibley because growth momentum is going to also move lower from here. David but we are still at 3. 6 unemployment. What happens to the phillips curve . Torsten weve been talking about that for many years, but even though the Unemployment Rate is so low, to everyones surprise, we have not seen that wage pressure rise. David and we are not getting job participation jump up in the way we would expect. Torsten people are coming back into the labor market. David but not into the levels but not at the levels from before the crisis. Torsten right. The labor market is still not as tight as we all had thought it would be at this point several years ago. David ok. Thank you so much. Torsten slok is going to be staying with us as we get the numbers in about four minutes. Coming up, moments away from the u. S. Jobs report. We will see how they may affect the fed rate cut. This is bloomberg. Anna this is bloomberg daybreak serco i am anna edwards in for alix steel. The markets anticipate the job report. European equity markets down. 5 . S p futures retreating below the 3000 mark. Now we go to the department of labor in washington, d. C. , where Michael Mckee is standing by. He has the jobs numbers. Michael here is a surprise. June. 0 jobs created in well above consensus and way above may, which was revised even lower. Asmployment ticks up to 3. 7 we have a big jump in the labor force by 335,000. The Participation Rate goes up to 62. 9 . Wage gains restrained but ok, up. 2 . The annual rate remains at 3. 1 . Solid gains across the board. Workers,nstruction 17,000 new jobs in manufacturing , 51,000 in professional and administrative services, and 61,000 in health care. Chin,etail took it on the losing about 6000 jobs, most in clothing and department stores. It is the fifth straight month that retailers have lost jobs and maybe an intensification of the amazon affect. We saw 24,000 warehousing jobs created, many in package delivery. We have 224,000 jobs created in june. 171,000month average of , six average of 172,000. Unemployment at 3. 7 . Cut that justify a fed rate , particularly 50 basis points . Is a question that will be hotly debated on the beaches of the hamptons today. David wish we were there. The markets are reacting the way you would expect. As an beep futures are down, 10year is up, the dollar is up. This is an initial reaction. To go over these jobs numbers, coming to ira jersey, us from princeton. Here with us in new york is torsten slok of Deutsche Bank. You said 160,000. Torsten it looks like rate cuts off the table. 224,000 and Unemployment Rates going up for the right reasons. Cohen a strong report across the right reasons. A strong record across the board. David are rate cuts off the table . Ira i do not know if they are off the table yet. There are other numbers that have been softening. If you look at the paycheck of the economy, wages time the number of jobs times the number of hours, that is still on a downward trajectory. This data does help. I think the market will continue to price for cuts but maybe not through this year, maybe only two. David Michael Mckee, i want to come back to you in washington. I thought that we would see upward revision last month, last month numbers seem to be right. Is there a timing issue . Michael there may be a timing issue. You never know with the may payroll,eachers go off bus drivers go off payroll, we had to amusement parks, but the revisions were small, 3000, a total in two months of 11,000. It does not tell you the economy has changed in one way or the other. A lot of economists but may was a fluke and this will add credence. Let me ask you about the implications for the fed. A lot have been describing the fed rate cuts as precautionary or insurance cuts. If that is the case, does the fed need to have a weak jobs number to justify it . Jobs data is notoriously lacking. Ira i do not think they need to have a low. Youve seen inconsistent job data over the last couple of months. The fact that you have survey data in the Manufacturing Sector moving lower as well as the ism services moving lower, and retail sales have not been growing at the pace the fed would like. That would keep growth much higher. The Federal Reserve has enough ammunition if they want to cut. Will they cut in july . I think they will because they are kind of committed to doing that. The market is pricing for that, even after this number. We will need much better data for the fed not to cut at all. Anna fed fund futures showing trimmed odds of easing after the jobs data but still expectations of easing. Mike, we have heard a lot from President Trump, a lot of pressure being applied to the fed by President Trump. The strength of the job creation machine in the u. S. Is going against what he is wanting. Sense butt is in that it is also a good news report for the president. He can continue to argue it is a great economy, certainly not the best in history as he likes to say, but it is a good economy and that is a great talking point for him. Hard to square the idea of rate cuts with that economy. We will see the next of the month numbers start to rebound. The fed does not meet until july 31. David i want to talk about sentiment and ceo sentiment. One of the things we have heard from the fed, we have to be concerned about trade uncertainty because ceos will hold off on investing. They may hold off on investing but they are certainly not holding off on hiring. Fed is thinking about making insurance cuts, you think about what they are insuring themselves against . At the end of the day the action is we get 224,000 jobs and the rate is flat or going up for the right reasons, then you end up ising maybe the trade war not weighing as much on the outlook as we had feared. It had an impact for a while, but this suggests the Services Sector is still managing to do quite well. David lets talk about manufacturing. Pmis have been disappointing. What do these numbers indicating to anything on manufacturing . It does suggest we are seeing a rebound. Most of the jobs created were in durable goods. The jobs lost in manufacturing, some in food processing. Perhaps we are seeing the lag effect of the tariffs on agricultural. Manufacturing wages went up by. 3 . We are seeing strength in manufacturing that has not shown up in those purchasing managers reports. It will be interesting to see as the month goes on, whether we see the regional purchasing managers rebound at all. Anna trying to join the dots between wage data and inflation. The average Hourly Earnings are slightly below estimates. Does that give us anything to worry about about the strength of the inflation impulse . Ira that is one of the things that keeps the paycheck of the economy muted and why i think of the fed was looking for ammunition, they would point to that number within the report. Like mike said, there is still a lot of data. Less than a month before the Federal Reserve meets again. One of the big data points is going to be the retail sales data. You need retail sales to continue to be much higher in order for the fed to say the economy is firing on all cylinders. That is another one of those data points that has been volatile recently. Good in some months, poor in other months. The market will be focused on that. Torsten, you say rate cuts her off the table given the strength of the data. We have another data point before we hear from the fed, the gdp in july. Will we Start Talking about that one is crucial . Torsten to be clear, the issue is there a lot of things for the fed but this is not making it easier for them to cut rates in july. It comes down to the discussion of insurance cuts. The debate should be what is it we are ensuring ourselves against . The other numbers that continue to come out on durable goods, and also on retail sales continue to be important. That it isgesting getting more difficult for the fed to cut rates. David we always say this is one data point, but it is the data point we have this morning. Average Hourly Earnings went down from. 3 to. 2 , but they were revised up for last month. The labor Participation Rate went up. 1 . Anything significant in that . Torsten if that is happening in manufacturing, maybe there is a silver lining, is not only about manufacturing going poorly. The answer is some of these trends, including participation have been going on for a while and the reality is we are not seeing the slow down the market seems to be pricing in. Anna join the dots between the adp report, which some suggested would lead to a bad jobs report. That does not seem to of been the case. I know we have no mention of the impact of temporary hiring for the 2020 senses. That is been the 2020 census. That has been one of the distortions we are looking for. No mention of that in this report. What are the other distortions we need to look for . Is ael the only oddball 20,000 gain in local government hiring. If there were a seasoning affect from teachers leaving payrolls, you might have seen it in that, but since this was not including teachers it is hard to explain. It is probably a seasonal issue. On the federal level, no significant changes. We have not seen any kind of bond. Of census in 2020 will have all kinds of distortions. A little bit more strength than we have seen in health care but that has been strong all along. More strength than we have seen in professional business services. That includes temporary workers. If we are seeing more temp workers, that is a good longterm sign. It is the mirror image of the may report. The may report, we do not lose a lot of jobs but we do not hire anybody. In this case we hired people and a lot of categories and did not lose that many jobs. They cancel each other out. David ira jersery, thank you so much for being with us. Torsten slok and Michael Mckee will be sticking with us. Month, jobs created last as opposed to a 160,000 estimate. The jobless rate went up from 3. 6 to 3. 7 and some softness in the wage growth, leading people to say it will be harder for the fed to cut in july. Coming up, going robotic does not necessarily mean layoffs. Companywhat the ceo of of a Company Wants to prove. We speak to him next in follow the lead. This is bloomberg. Viviana this is bloomberg daybreak. Coming up on bloomberg the open, larry kudlow. Anna a betterthanexpected jobs report from the u. S. What impact is that having on markets . The dollar goes higher. The market reprices to what extent we get fed rate cuts. The u. S. 10 year goes back over 2 . We have been talking about this downdraft of bond yields. This seems to have turned the corner. How temporary will that be . Market selling bonds and selling stocks. That is from a sell everything mentality. 1. 3 , belowdropping the 1400 mark. Stocks in europe take lower on this better than anticipated 224,000 rise in u. S. Payrolls in june. David it is time for all of the lead, a deep dive into four follow the lead, a deep dive today on this job days, we look at the Manufacturing Sector and how globalization and automation are affecting manufacturing jobs. ,e turn to Michael Mckee bloomberg interNational Economic and policy correspondent still in washington covering the jobs numbers. Michael we had see disappointing numbers out of the ism manufacturing numbers but the hiring rebounded. 7000 manufacturing jobs were added, and for workers wages went up. 3 , which is more than the overall economy gain of. 2 . Within the categories, we saw solid gains in durable goods manufacturing, particularly for electronics. We did see a few losses for automobile manufacturing and we did see losses in the steel industry, which is subject to tariffs these days. In the fabricated metals, about 1400 jobs were lost in june. A much to Michael Mckee, reporting from washington. In the meantime, we want to talk to torsten slok about what is happening with manufacturing . Torsten manufacturing has been going through this turbulence. That is why the ism has been rolling over. The question becomes how much of that will continue. The job numbers suggest that things for now look a little bit better on the employment front but maybe the Manufacturing Sector still needs more runway. It is a global picture that manufacturing has been deteriorating. David lets talk about what robotics may or may not be doing. Steel Wire Products of maryland is a leading manufacturer of custom products including steel wire and sheet metal that imports to 38 countries around the world. We welcome the ceo, drew greenblatt coming to us today from philadelphia. Give us a sense of your business and the role robotics play in it. Optimistic, this job report reflects what we are seeing. We are using robotics to help our employees be more productive, more viable making unique parts, patented parts we can ship all over the world. It is critical. Robotics and automation is empowering our employees to make more precision and more widgets per hour. In our case, we are making baskets for automotive and pharmaceutical and medical applications. We are shipping these all over the world. We would not be productive or able to offer this line of roboticsunless we had and automation. It is critical, and you will see a lot more of it in American Manufacturing. Anna the u. S. Jobs report came in strong and that suggests confidence in the u. S. Economy. Some have bemoaned the lack of investment globally by corporate amid this spat between the u. S. And china. What gives you the confidence to invest in technology when others are not . Drew we invested over 2 million in the last year. We just bought another press brake two months ago. We are pouring it on. We are optimistic about the future. We think there is a tremendous upside coming our way, and for manufacturing in general in america. We have a lot of things poised for good times. Tax rates are finally rational. Made soons are being companies can grow and thrive. Whetherre reassessing or not it makes sense to build in china or india or mexico or built in america. A lot of people have looked at the calculations, saying we should build in the usa instead. That is wonderful for our American Manufacturing workers and it will increase their wages and opportunities. Jobs report,n the people are coming off the sidelines because there are so many opportunities. In American Manufacturing, over 400,000 jobs have openings where we need people to grow. It is exciting. David it is clear that robotics can be good for companies and shareholders. Lets talk about employees. There an Oxford Economics report out that says we will lose 20 Million Manufacturing jobs because of robotics. It goes in to how many jobs you lose for per robot, 1. 6. Lower income, you lose 2. 2 jobs. Is that your experience at your company . Drew it is the opposite. Client buys wire forms from india for many years. Because we had major investment, about a half Million Dollars into this one robotics sell, we won the jobs. Now rather than the parts being made in india, they are made in baltimore. We bought a stamping press from ohio, a threading machine from ohio, and those factory workers are all hired. We only by our steel from an illinois steel factory. All of these other factories are doing better because of that. That machine is running seven days a week, 24 hours a day and we are shipping those parts to mexico, china, india. That would never have happened unless we had that investment in those robotics. I have employees three shifts a day running that machine. I reject the conventional wisdom. Anna just briefly, you are buying u. S. Steel. The price of steel in many markets has gone higher because of tariffs. Even if youre not importing it yourself. Are you paying more for steel and is it worth that . Drew we are paying more for domestic steel. We by domestic and we are paying more. Im hoping the trade war ends soon. Atit does, i am hoping that the conclusion, we will be protecting intellectual property. We will make it more fair for the American Manufacturing worker. Patents. S six we need to have our government protect those so Chinese Companies and Indian Companies cannot steal our novel idea. We are using the time and money and r d to come up with innovations and we need these protected. Im hoping this is a shortterm dislocation and what is going to happen is the American Worker will be better off because intellectual property will be protected. Anna thank you very much. Drew greenblatt, marlon steel slok, thankten you for joining us. The job report much stronger than expected. Coming up, we will well on the job story more. How does the u. S. Labor market stack up against its peers in europe. More on that next in what i am watching. This is bloomberg. Anna welcome back to bloomberg daybreak. Im comparing u. S. Versus european jobs and i have a comparison of the Unemployment Rates we see in germany, the u. K. , and the u. S. It is incredible how similar these paths look since the financial crisis. How steadily they have come down. Many people asked how low can the Unemployment Rates go . We know the u. S. Manages degrees these jobs from somewhere. 224,000. David jobs but not so much the wage growth. We see softening wage growth. Anna the wage story is part of the metric when you look at how these tight labor market you cannot disregard that. This is quite backward looking data and i keep coming back to that point in terms of getting a read on where the fed goes next. The market has seen these numbers and ranged back its expectations. David that does it for bloomberg daybreak americas. 224,000 new jobs versus 160,000 expected. The markets are responding in kind with futures down. Coming up on the open, larry kudlow will be talking with jonathan ferro. Live from new york and london and thank you to anna edwards, this is bloomberg. When you rest on a leesa hybrid mattress, bedtime is no longer simply the time you go to sleep. Its time to switch off and catch up. Enjoy me time, and we time. 40 winks or 8 hours solid. The leesa hybrid mattress combines two technologies to give you deeper rest and rejuvenation. 1,000 pocket springs provide edge to edge support, responsiveness and comfort. While premium foams relieve pressure, keep you comfortably cool and limit motion transfer. Leesas hybrid mattress is not only recommended by experts, experts choose to sleep on it too. Try it yourself in any west elm store. Or order online and well ship it to your door so you can try it risk free. The leesa hybrid is american made. Built to last. And, because Everyone Needs a place to rest, we donate tens of thousands of mattresses to those in need. Live healthier, live happier by resting deeper. Get 15 off, and 2 free pillows. Go to leesa. Com today. Jonathan from new york city for our audience worldwide. Im jonathan ferro. The countdown to the open starts right now. Jonathan coming up, it is payrolls friday. Jobs growth faxing out strongly in june following a weaker may. After another record week in the bond market, will the hunt for yield get easier . 30 minutes until the opening bell. Good morning. Heres your friday morning price action. Futures 13 on the s p. Down. 4 as we start to wind back some of the rate cut euphoria. Eurodollar 1. 1244. Reasuries higher lets begin with our top story. The payrolls report with Michael Mckee breaking it down for us. Michael it is fair to say nobody saw this coming. Mays 72,000 after revised down