This for bloomberg on the economy. I am going to lose the introductions this morning and get right to the moment. Weve got great markets. Yields higher, dow futures up 300, etc. No one is focused on anything but an update on this grim labor economy. Jonathan how quickly can this labor market hell is the question we ask every single month now, and we will ask it continually through the morning . Maybe we getting median estimate , maybe it comes outside of that. But the question hasnt changed. It is how quickly we will heal after a big downturn in a very short space of time. Tom a lot of opinions on that, and of course, as i was just mentioning, across the 10 of the american demographic, it will be a different rate of change for the haves and the havenots. And, what is so important, you nailed this a number of weeks ago, is the damage to the broad middle class. We are focused on the elites at bloomberg, and we are focused on maybe the people that service the elites, but it is a broad swath of america that is going to be gripped by 20 unemployment. Lisa the lowest earning americans are the ones that have been hit hardest by the pandemic. I keep coming back to fed chair jay powells note that of people that earn less than 40,000 a year, 40,000 of them less than 40,000 a year, 40 of them lost their jobs. Theres a lot that will not be answered by this jobs report. It does not capture the reopening we have seen in recent weeks. But perhaps we will get a sense of how much job losses are widening beyond the initial cuts to those lower income workers. How much do they widen out respective industry, as well as earning power . I think that could be potentially instructive into the path of this recovery. Tom tom you absolutely nailed that. Thank you so much. This is a huge deal, folks. Jon, i went to get to you once more before we go to our esteemed guest. I want to preview arguably the conversation of the day, where you will listen to the justification forward of the trump administration. What is your first question to Lawrence Kudlow today . Jonathan i wont give away the first question, but i will give you some insight into what we will talk about. The fiscal plan Going Forward from here. There are enhanced under Employment Benefits that expire. Does it get extended or redacted . That is going to be one of the questions we will talk about a little later. We have learned in the last one he for hours that the administration is looking at another 1 trillion fiscal effort, but maybe weve got to wait another month to get clarity on the details of it. Tom in my walks around the city yesterday, i dont know if we could wait a month, given everything boarded up from the protests and riots as well. We welcome all of you in this simulcast on bloomberg radio, and washington and boston. Thrilled you are joining us as you work from home, as so many millions are doing that. This is what we do best. We just had on danny blanchflower, looking at it from an academic purview, and now one of the Market Economics leaders on the analysis of the american wage economy, and that is tom capital markets. Let me get the numbers out of the way. What is the Unemployment Rate going to be today, and far more importantly, what is the u6 all in statistic going to dictate going to indicate . Tom p i think this is the right discussion point for today because i think theres a lot of moving parts in todays payroll numbers. I think what we have to keep in that adpus, we think report, we do not believe that was a fluke. People keep on saying they be something quirky was going on. I think this is what continuing claims drives home. You probably lost about 2 billion jobs, which is a bubbly what we expect today. If we backup for a second, this reportsy two distinct embedded within the payrolls were. Theres the establishment report and the Household Survey. In the establishment report, this is where we are looking for a decline in jobs, and again, that would be consistent with continuing claims and the improvement we have seen there. But theres another part of claims we need to keep in mind, and that is pandemic. Nemployment assistance it is for the selfemployed, the could not get the standard unemployment insurance. What we actually see happening is this dynamic where pua is incredibly elevated, so what we can see is that the Household Survey will probably want up should job losses that he sort of standard establishment number. What that means as a result for the on employment rate is that the unappointed rate is going to rise to at least 20 in the current week. I thing theres going to be maybe on the initial print, there might be a little bit of confusion on the markets part of which number we Pay Attention to. We think the establishment numbers are really they think they should focus on, but more critically, theres live data coming out that make todays report looks stale at this point. Jonathan thats what i want us to build on because i thicket is really important. Just how instructive this payrolls report is about how well the reopening is going what do we actually learn on that . The reopening is going. What do we actually learn on that . Tom p i dont think we learn much. There were some data yesterday that came out that basically whatd, it comported with we learn from the last payroll report, that most people were put on temporary layoff due to covid19. More critically for us, and i have said this to you all before, theres some really data out there. Theres a company that helps payrolls, andage what we can see from that data that comes up daily is that you started the process of applying back jobs. That is to esoteric, just look at the adp. The adp report. [no audio] jonathan so double figures at the end of the year. That is the base case . Tom k thats exact a right tom p thats exactly right. Jonathan that is unbelievable. That is a difficult environment. Where the market is right now, it is interesting in the sequential positive surprise of reopening away from, the sequential month on month improvement. You got to think about the limit of that improvement, how quickly we can actually get this down back to where we were several months ago. What is interesting here, i think it is so important to understand that a bit ago for , Jonathan Ferro, Lisa Abramowicz and myself, 10 in employment was on except about, and today we are wishing to get there. Lisa that is exactly where i wanted to go. I wanted to pick up on this idea that we are seeing more hiring at a pretty quick pace, but that is to be expected, right . The economy was closed to prevent the virus from spreading. Now people are going to get rehired. What are you looking for to determine the permanency of some of these layoffs that are being attributed to the pandemic . Is there any gauge youth inc. Is reliable . Age you think israelite any gauge you think is reliable . Tom p people have been put on temporarily layoff. Most people were laid off because of covid19. The notion of permanency, i feel at this is a dangerous word that i thicket tends to be overused. If you are going to make the case for permanent job losses, that youre going to see some structural shift down in the, the people that are going to be employed, i hope people are doing the homework on how you arrive at permanency. That means there has to be some structural permanent downward shift from a demand perspective, from a Consumer Spending perspective. I dont know how you make that claim right now. I think it is something you need to be watching for. If it is true that this is a government and aided shutdown of an economy and that the process of reopening is underway, it is hard to lay claim just given the landscape that exists today that youre going to see any permanent job losses. Again, make the case that we are only going to need 80 of the amount of workers because of some technological shift, or because you do think theres some permanent downward shift from a consumption effective. But that is much harder to lay claim to that idea today, given the information that we have in hand. Jonathan we are tight on time, but just one quick question. We know he has been following the nasdaq for quite some time. What does your kid think of the nasdaq getting back towards alltime highs . Tom p preston was in my office yesterday, and he limited the fact that he lamented the fact that the he lamented the fact that the s p and the dow are not agree in, but he said, dont worry, daddy. You are invested in the nasdaq, right . I didnt have the heart to tell him that, no, daddy is not. [laughter] jonathan maybe he should be running the money over at porcelli lp. We count you down to payrolls friday here in new york. Alongside tom keene, im Jonathan Ferro, together with Lisa Abramowicz. This is bloomberg surveillance. Equities elevated on the session, yields higher, and the dollar week there as the dollar weaker as optimism filled about a recovery. This is bloomberg. With the first word news, im ready could. In buffalo, new york, two Police Officers have been suspended video of them pushing an elderly protester to the ground went viral. Originally said the protester tripped and fell. He has been hospitalized in serious condition. The federal plan to contain protests in washington dc employees civilian law enforcement, national guard, and active duty army personnel. So far, the activeduty troops have been kept outside the city. National guard forces include 1700 troops from nine states. The latest round of talks between the u. K. And the European Union finished today without a trade agreement. The eu chief negotiator Michel Barnier accused the u. K. Of backtracking on commitments it made when it left the bloc. He warned that talks make no progress. That will add pressure for Boris Johnson and ursula von der leyen to intervene directly. Opecplus is ready to extend production cuts to prop up the oil market. It took almost a week of wrangling come about Coalition Leaders saudi arabia and russia were able to reach a tentative deal without holdout member iraq. They were pushing the iraqis to stop shirking their share of the cap pets of the cutbacks. Global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. Im ritika gupta. This is bloomberg. The fed needs to be careful not to let off on the accelerator pedal too fast. We are coming off about a halfdozen years where inflation ran below the 2 objective. That really doesnt the fed really doesnt want to allow that to perpetuate. Jonathan david wilcox on the Peterson Institute on the need for the fed to do more. I confound you about 50 that disagree with him on the fed doing more. But that is this market right now, very polarized over Monetary Policy for the months ahead. From new york city this morning, good morning. Alongside tom keene, im Jonathan Ferro, together with Lisa Abramowicz. Drift higher once again on the session, up on the week, higher by 23 this morning. By 23 points this morning. Up 0. 3 . Going into these job numbers, but we have seen is off a very low levels historically. Theour basis points on session, and in foreign exchange, after real euro up forh, eurodollar. 6 . Your payrolls report, 7. 65 million is your median estimate. If anything, those numbers are a little more attractive, like the adp report was two days ago. That may be true, but there are many other statistics that really matter to show where this nation is in terms of not only unemployed, but the many other shades of unemployment that could abduct to well over a 20 statistics. James glassman is with jp morgan, and he has been a foundation to our labor economy coverage here at number for years. We are thrilled he can join us again this morning. I want to know the singular distinction you would look at this morning in all of this labor data. What is the way you would try to that wall of statistics . James good to be back in here. As you said, the real problem since the last survey was the unemployment problem is really now more about the self wide. Payrolls may not be down as much as people think, but unemployment is still up. I think it is really difficult to see through the fog of all of these awful numbers, but i think one thing that does distinguish in theom other periods past, particularly the Great Depression era, is that washington took some very big steps to help replace the income that people were interning by not being able to go to their work. You saw that story last week in the personal income report. Labor income way down, but personal income up. Now am i starting to see restaurants opening up. Things are beginning to happen, and i dont anyone would be surprised by any news. There is nothing in this report today that is going to help me understand. What we want to know is how quickly we will get back on our feet. We wont know for a while, but i think all of the help we are getting people to replace the income is going to go a long way to helping them get back to life. But i think that story is only beginning now. I wouldnt expect the job market report, as you can tell from the weekly jobless claims figures. Theres nothing i really see that is going to be positive or is going to help me understand where we are going area where were going. Lisa you have held prominent positions with a number of different acts, but you also have traveled around the country. You have been talking to people and finding out how they feel about the economy. You have been doing it virtually. How is sentiment right now . I think everybody understands that there is no template that we can look to to understand what is going on right now. Understand we are in a bad way, and people are beginning to sense that things are breaking up. If i cant go to the restaurant, cant use my gym, i am hearing more and more of the cons of stories that things are stabilizing most of the folks in commercial real estate, manufacturing activity, people sense that, ok, we took a really big hit in march and april. It seems like stabilizing, and i think people are hopeful. They hope that what is going on in the equity market is the right way to think about the future, that we are going to have a faster rebound, but i think everybody is in a fog. They are waiting, and they hope that people who are more hopeful like me are right. But i think they have a better understanding of what is the. A lot of people still havent been able to go out of the house. I imagine the majority of people that make up the estimates for jobs day today live in new york city. I wonder to what degree being anchored in a city that is still shut down distorts the overall perception of what is going on in the broader economy and of the whole country . James probably so. When you think about what happened, a lot of the trouble we are seeing in the job market centered in the Small Business community. The companies that follow that kind of activity tell us that activity dropped 65 . Think most of this happened earlier, mostly in april. I think, though, we all know the real problem is that may people who are selfemployed didnt have access to unEmployment Benefits until late april, so they are the ones that are now showing up in these statistics. I am based in the l. A. Area right now, and i see things waking up. It is amazing. Restaurants are starting to open up again, gyms are starting to open up. Thatnk there is a feeling things are starting to wake up, and when they do, you would expect to start to pay more attention to employment because then you know that the tide is shifting and he will be asking how quickly we can get back on our feet. So i think what is going on in new york city is important, but much of the country really hasnt shuttered like we have been in the big urban areas. Jonathan jim glassman of j. P. Morgan chase, always good to catch up with you. Hope you and yours are doing well. Million is your median estimate. Where is your focus, come 8 31 . Tom i am going to go beneath the headline data. I used to look at the median weekly statistics. Now i dont. In at the right to see if it breaches past what we saw in 1933. On this payroll friday morning, good morning to you all. This is bloomberg surveillance , live on bloomberg tv and bloomberg radio. Heres the price action shaping up as follows couple with equity futures drifting higher on the day. Equity futures up 22 points, positive there. 7 . Year yieldsofter, 10 up four basis points to 0. 86 . Just around the corner, the payrolls report, then Immediate Reaction from Jeff Rosenberg of blackrock. On this payrolls friday, this is bloomberg. Jonathan from new york city, this is bloomberg surveillance. We are live on bloomberg tv and radio as we await the payrolls report in the United States of america. Estimate,te the 7. 5 million. The number, here is michael mckee. Michael we are waiting for the numbers to come out. We have seen a few numbers. I am a little stunned by this number. 2. 5 million in may according to the bureau of labor statistics. The Unemployment Rate fell to 13. 3 . I do not know what to tell you. We will have to look at these numbers very deeply and see exactly what is going on. The Unemployment Rate declining 1. 4 . The number of Unemployed People fell 2. 1 million to 21 million. The major groups show that black unemployment, let me see if i can find that, went to 16. 8 , asians 15 , little change on the month. The white Unemployment Rate 12. 4 . In terms of the overall statistics, average weekly hours bounced. From 34. 2. To 34. 7 those who are working are working harder. Average earnings did fall by 1 during the month. That takes the yearoveryear rate down to 6. 7 . Those were distorted by what we have seen in the labor markets, people who make less falling out of the labor force. The Labor Force Participation rate goes up to 16. 8 from 16. 2. What may have happened is the payroll Protection Plan may have helped along with a few state starting to reopen. Survey taken during the week that includes the 12 of the month so it is early in may. That does show the u. S. Economy is a lot more resilient than we anticipated. Jonathan absolutely fantastic news if it is an accurate representation of what is happening. Shocking for all the right reasons to see the number. Very high to positive territory. It begs the question, how did 70 people miss a big upward move in this economy in may . Michael it is hard to get any kind of statistics that lead into this. When you look at the number of people filing jobless claims, we are over 40 million. You figure those people are not working. At the Unemployment Rate, you can understand because the denominator can change given the number in the labor force, but in this case the number of people in the labor force went up. When you look at the number of people who got jobs, that is not reflected anywhere. This number will be ahead scratcher for a lot of people. We will have to find out what happened. It does appear the labor market is not in as bad a shape as people thought. Notfriend said this will tell us anything about the future, but this may presage a faster recovery than we anticipated. Jonathan really encouraging news and we hope the data still to come confirms the improvement we are seeing on the screen. Equity futures up 37 points on the s p 500, positive 1. 2 . In the bond market, we talked about the high yields. We are seeing it. The 10 year yield up 10 basis points to. 92 at the moment and in foreignexchange, the dollar against g10 showing more strength against the euro. Eurodollar coming in. 4 . Upset whatt an an upside surprise. Really encouraging. We hope the data backs up the improvement we have seen this morning. Tom that is the single greatest moment i have ever seen of michael mckee. What he did was an absolute Tour De Force of the shock of these reports. The markets move. The mix importantly is that came into this report, the fuzziness of different government programs, even state programs and how they meld in. As mr. Mckee mentioned, this will need study. We begin our study with Jeffrey Rosenberg of blackrock. You know well the squishy nest of how we measure Labor Dynamics in america. When you dive into this analysis for your market analysis, what will you search for in this shopping report . Surprise, and a certainly the market was looking for much weaker numbers. We are all diving into the details. The message appears to be about the pace for returning workers relative to the pace of additional layoffs. That is a clear positive trend. The opening up in the economy across the various states had been better than what everyone was expecting to see out of this report. The other thing that is interesting is the big distributional shift that we saw in april, where we saw a surprising or perverse increase in average Hourly Earnings because you have the biggest impact from the lower worker wage coming out. You are seeing that reversed. That is another testament people are getting back to work. People are returning to work. The people harmed the most that drag down the overall payroll reports and pushed up average Hourly Earnings, you are seeing that reverse as well. This is clearly a good time. The market has been telling you for a while we are getting back to work. Tom there is no questions the markets have been leading to this kind of shock report, but if you look at the social unrest in america is this a surprise in the sense of labor stability for a small part of america that is employable versus everybody else . You mentioned distribution. What is the barbell of our labor economy right now . Jeffrey we have seen that for a while in terms of up until the coronavirus crisis, this had been a labor market that was benefiting the distributional aspects, meaning it was a tight labor market, meaning you saw the biggest gains coming from the lower end of the labor pool. All of that was turned upside down by the pronto virus crisis in that it had disproportionate impact. Where you cannot simply move the job online when you cannot move to remote working. That is in many areas of service ,mployment, retail employment things you had to shut down for coronavirus had the biggest impact. That turned on its head what had been a strong labor market. What we see is some signs that as we return, we will ease the pressure relative to the extreme of no work at all. The question will remain, what comes back. How far back do we get and how long does it take . Despite the optimism on the markets, there is still the case that we will have had permanent losses of employers, permanent losses that will not come back. That will be a darker cloud. Today there would be more optimism. We have to keep in mind we did see real decline. Jonathan i just want to sit on this moment for a minute. This is absolutely stunning for all of the right reasons. Nobodyside surprise that was anywhere near estimating. What is the risk for you . That we extrapolate this improvement too far . Risk and the bond markets, we are at a loss for how to think about what are the levels of yields . The issue is is it about the fed saying it is supporting market functioning. In space of an epic increase in issuance. Uncertainty,mand we have more uncertainty on the amount of supply. We have less certainty about how much the fed will be willing to support that. When you add to this momentum around growth and increasing yields, it creates a huge uncertainty around the shape of the curve, the pace of yield curve steepening, what exactly is the yield curve shape the fed will want to see . We will pivot into that when we talk about the fomc meeting next week. The markets are challenged to figure out what is the right level of yields because it is not driven solely by these economic fundamentals like the payroll report would have done in years gone past because we have this historic it is analogous to world war ii history. Relative to our modern experience, a historic change in the fed operation with regards to what we are talking about, which is yield curve control. What are the levels around that . Lisa we are speaking with Jeff Rosenberg of blackrock. We are seeing futures rising substantially. The s p futures now up 1. 6 . Longer dated yields also ripping higher off of this report. 10year gilts at. 93 . Yields at10 year. 93 . Youre getting a pylon as people expect this to portend good news. Can we go over the fact that this does not cohere with the continuing claims and the jobless reports we are getting out of state and federal agencies over the past few weeks . There is a skepticism one has to have when looking at these numbers. Can you explain that to us . How much confidence can we have that this accurately portrays the picture on the ground. One way tojeffrey ascertain the uncertainty is to look at the spread of uncertainty of Market Expectations going into the report. Nobody had it on the positive side, but even within the negative side you have 2. 5 million to 8 million. We are in uncharted territory. When you look at the traditional tools we use to predict the plus or 200,000 in the payrolls report, you can map those pretty clearly to the highfrequency data to get ahead of the payroll report. , we are out of a toolkit to know how to do that forecast. That the positive number here is reflecting some things in terms of the data calculation. , do not have the Response Rate at least the april Response Rate had been in the historical averages. That is probably not in the claim. We are just in uncharted territory for knowing how to address these issues. What we are capturing is the inability to forecast what returning to work and the pace of returning to work is, and the distributional aspect we are talking about. Trying to aggregate up at one number of prostate level impacts that are highly disparate. Very hard to bottle that into forecast that. I think that is what we are seeing in terms of the surprised relative to the economic forecast. Tom this is why we love to have Jeffrey Rosenberg on. I cannot convey to you the importance of the three sentences Jeffrey Rosenberg just stated. If youre joining us, our simulcast worldwide on Bloomberg Television and bloomberg radio. We welcome all of you. I will not give you all the statistics because as jeff said i do not think the statistics matter. All you need to know is once again the market is out front, away from the gloom. These are shocking statistics but nowhere near the gloom that was expected before this report. Jeffrey, i want to go into your Carnegie Mellon mathematics. You have used twice the word distributional. I agree with you that good takee are trying to blended, brought, below statistics, and aggregate them up to a single reportable Unemployment Rate. Even in good conditions, that is impossible. How impossible is that to do right now . Jeffrey it is particularly youlenged right now because have a shock that is outside of anything we have seen. Remember how these forecast models are built. They are built off of historical information, built off of models that have some kind of intuition around how normal economic behaviors respond. To try to doift that forecast. You try to pull in highfrequency data. Because of the specific differentiated nature of how we are reopening the economy think about what this labor report represents. It is total nonfarm payroll across the entirety of the u. S. Look at the differences in how states have reacted. To build that model correctly, you have to have statelevel models with statelevel data. That does not exist yet. That is a part of the challenge and part of the expo nation part of the explanation for why you have such a wide band and how the numbers come out of the wideband. Tom this is what bloomberg surveillance is all about. From David Blanchflower and then get lucky and have Jeffrey Rosenberg with us at this time to explain the noise around this voluminous wall of statistics. It will be fascinating to see framed by the political voices in the coming hours, including Jonathan Ferros conversation with Lawrence Kudlow. We need a data check because it is a big data check. I will go top to bottom. On the vix, 23. 98. Panic, gone from 80 and through 60 to 30, and just this tok have ground down from 29 23. 99. A sign of complacency. Futures up 47. Dow futures up 26. Market, yields explode, except they have been exploding all week. 93. Ar yield you may see a 1 10 year yield today or the nottoodistant future. Curve steepening to 70 basis points. That is a completely different statement of the yield curve market than what we saw five and 10 days ago. Gold plunges below 1700. It has broken a key level. Down 2. 5 . Oil its own story. 42. Rent crude Everett Morris of citigroup and the 4 00 hour today. A stronger dollar. Someone who has had a modest luxury of 12 minutes to interpret this is our chief International Economic correspondent michael mckee. Lampton, know scott who has a real job unlike me, i went to him and i said is there an appendix that explains all this . The beos is good at that. Michael mckee, is there an appendix . Michael there is not an appendix that explains why there were so many jobs created when we expected so many lost. The losses are explanations for some of the statistical variations. We are still missed classifying workers in the Household Survey. They are supposed to be considered absent from work, but on payrolls they are not counted. Therefore the overall labor force does not rise as much. They say if they had been properly classified, unemployment would be 16. 3 . It would still be a low number compared to what we were expecting. As long as im talking unemployment, let me give you other numbers. White unemployment falls to 12. 4 . Hispanic unemployment from 18. 9 to 17. 6 . Those are still huge numbers. Disappointing numbers given where we have been, black unemployment rises to 16. 8 from 16. 7 . News, to pivot to good but aggregate hours worked is sometimes seen as a proxy for gdp, and they rose significantly , which will have economists scratching their head but also going back to it and may be refiguring some of the forecast for gdp. May was supposed to be the worst month, and if aggregate hours are trending higher, that would be good news for total output. Lisa i hope this report reflects a real surge in strength and optimism that perhaps has not been reflected in some of the economic reports and expectations. I am still struggling to understand the lack of coherence with the continuing claims and the initial jobless claims we got out of states and federal governments over the past four weeks and how that relates to what we are seeing in this report. Michael we are all struggling with that. I went to twitter where all of the experts will opine, and the basic message is we dont know. Everybody will be trying to figure out what happened. Restaurants closed by the thousands. Even in a few states where they started to reopen, people were standing outside and sitting outside. Leisure and hospitality hiring oft up 1,239,000 from a loss 7. 5 million the month before. Where did those people come back to . Suspicion will give that it was the payroll Protection Plan. People went back onto payrolls. Because at the moment you have to keep them on for eight weeks. That was the limit. Are they going to start getting let go again . That will be an issue. Is this a high and we will fall off . That will be a key question as we go forward and try to figure out what is going on. We did see Department Stores announced they will be bringing back workers during the month, risee saw retailers 368,000. That might be more stable, but it will depend on whether people go shopping. Things were better than we thought, but i do not know how much this tells us about how good it will be Going Forward. Tom michael mckee, you are reporting michael mckee, your reporting at 8 30 was extraordinary. Michael mckee, with decades of experience. Absolutely stunning. Lisa, i look at where we are and the humility of this game of data. Over is a thing called one the square root of n, which they pound into you in statistics, which says you better have humility at all times. That has been a hallmark of the show for decades. More than any other moment i can think of within economics, this morning and this jobs report is something that brings on humility. Lisa i would agree with that. I also think there is a huge challenge with the labor market and the economy moving this fast when it is this hard to pinpoint what is going on on the ground. Usually the numbers do not live. Yet the numbers are being cast into question and it becomes highly political. You have some people saying all of you who are gloom and doom, this proves you are wrong, and then you will have people saying can we trust these numbers . The dueling narratives will be driving the conversation Going Forward. Tom no question. We will have to see how that goes. All, whenisa, all in i look at this, and this was touched on by jonathan and michael is that even though it is a better report, it signals a difficult economics. , theff rosenberg said distributional and demographic shifts are tangible. Lisa President Trump will be speaking at the white house at 10 00 wall street time about the jobs report. It will be interesting. I have to think this becomes political, this becomes a question of has the government effectively staved off the pain that could have been had they not acted as quickly as they have . We have been seeing futures ripping higher ahead of the open. Gina martin adams, chief u. S. Equity strategist with Bloomberg Intelligence joining us. Gina, my first reaction when futures did move higher was why they did not move even higher than the fact that this is a massive upside surprise. What was your initial take by the equity market response . Gina i think the equity market is responding appropriately. It is one number. It does not mean everything. It is a betterthanexpected number. Consistent with the trend rate of improvement or less bad data. Consistently we are seeing more confidence data to suggest april was likely the low for most Economic Data theories despite the fact that we were shut down for at least part of may, the Recovery Process in the latter part of may does seem to be lifting the data somewhat, and that is largely what the market has been trading on for last couple months. The equity market made its low in march anticipating we would start to see green shoots in the Economic Data. It is a confirmation of what the equity market has been trading on. Oint has been trading tom short on time. I will be direct. What does the higher yield structure mean for the banks . Is this a time the banks get on fire . Gina it should be. As long as the yield curve is becoming more upward sloping. As long as you see lesser chances for bankruptcies pressing their way through the system, the Financial Sector is extraordinarily undervalued. It is one of the cheapest sectors in the u. S. , and globally extraordinarily cheap relative to the rest of the sectors trading at incredibly suppressed pricetobook ratios, and that is largely because of anticipated bankruptcy risk. A lot of concern that we would see this economic recession last for a significant period of time, which would weigh on the Financial Sector. It is not all about yields. It is about reducing bankruptcy risk as economy start to recover. It does not hurt that the yield curve spread is widening and has been widening, confirming a better outlook for the last several months. Tom very good. Thank you so much, gina martin adams. Greatly appreciated. This has been an extraordinary day. There will be a lot of analysis about this shock of better numbers. , anyerson weighing in other president would do the same thing, is the president of the United States. This is a quote amazing jobs report. The president speaking at 10 00. Scheduled to speak with Jonathan Ferro will be his National Economic advisor Lawrence Kudlow. I think that will be a positive report as well. We thank all of our guests. This has been an extraordinary bloomberg surveillance this morning. Stay with us. More ahead on Bloomberg Television and bloomberg radio. From new york city for our audience worldwide, good morning, good morning. The countdown to the open starts right now on this payrolls friday. Here is the morning price action. Off the back of a massive upside surprise, your equity market higher 50 points on the s p 500. E advance 1. 61 the cyclical part of the market running through the week and we add some weight to that. 30 minutes out from the opening bell. , eight basiswer points higher to 0. 9 . In foreignexchange after being weaker against the euro, the dollar comes in. 4 . That is a weaker euro and a stronger dollar. That is your price action. Heres the top story. The biggest upside surprise we have ever witnessed following the worst payrolls report we have ever seen in history. It is shocking for all the right reasons. For the millions without a job, we can hope this is