Transcripts For BLOOMBERG In The Loop With Betty Liu 20150109

Said to be inside a Printing House not far from pariss main airport. The suspects are holding a hostage. According to a french lawmaker theyve told the police that they want to die as martyrs. One reportedly traveled to yemen for al qaeda terrorist training. Meanwhile, there is now a report that five hostages, this by the way is a live shot going on right now, that have been taken inside a cosher supermarket in paris. No other details are available right now. But we will be sure to bring them for you as soon as those details come online. But as you can see right now, this is a live shot of what is going on with the second hostage situation at a supermarket in east paris. We are now less than a half an hour away from the december jobs report. According to one survey, they added 240,000 jobs last month, that is less than in november. But would mean almost 3 million jobs were created in 2014. Thats the most in 15 years. Onto our other top stories, the European Central bank to help jumpstart the economy, thats according to a person who attended the meeting of the governing counsel. Policy makers may decide to implement kwan tay tive easing after meeting. On capitol hill, they expected to pass a bill approving the trorlinge Keystone Pipeline. Theyve already done that nine times in the last three and a half years. This time the house is expected to be joined by the senate which may vote next week. Still president obama is promising to veto the bill and there arent enough votes to override that in the senate. Taking started a fight to the company should be broken up to unlock shareholder value. Now back to the latest on that hostage situation developing in paris. As i mention now there are five hostages that have been taken. Bloomberg International Correspondent is at the scene of wednesday attack at the magazine site. Hahn, what do we know so far about these parallel incidents going on . Well, betty, they may be more than parallel, they may as well be related the shooter in yesterdays morning attack in is south of france left a police woman dead is believed to be the same shooter who has those five hostages. Just a few kilometers away from here. Thats just to the east of paris. He apparently, according to local reports, has a relationship with the two brothers, the two brothers that are holed up northeast of paris. What we know now is the president has dispatched his interior minister to the site and they are going to try to monitor the monitor the situation there. There are some reports from the second situation in the northeast, northeast of paris. The go brothers there want to die as martyrs and they apparently have one hostage. So we have two hostage situations. We have some bluster from the french government that at least for the two brothers those in the northeast, that they have them in a mouse trap. But not a similar level of confidence of the second shooter who may have these five hostages in a kosher delhi, if not a few kilometers from where we stand here where this all began some 48 hours ago. Betty. And hans, now there are also reports that shooting yesterday of the police woman may also be linked to the brothers. Yeah so the link is between the shooter, the shooter from who shot the police woman in the south of paris yesterday morning and the two brothers. The question then becomes are they part of a larger cell. If theres a nexus between them, what sort of connection and was it operational, was it merely social. If it was operational we could be looking at a potential cell. We do know the older brother, he did receive training in yemen from an al qaeda affiliate where he received some light arms training and some fire practice training which may explain betty just the precision, the spread with which some of the bullets landed outside right behind me. Betty . All right, just quickly you mentioned the president and the statement hes been making. Hes going to be holding a meeting as well this sunday. Yeah, so what we have sunday is, well there are two events. One we have all the political leaders in france with the exception of the leader of the far right party, they will have a march here in paris. All tin tear your ministers from across europe as well as tern general from the United States will be here in paris to talk about broader security measures that they can implement that they can potentially hormonize to prevent these sorts of attacks. Hans, thank you so much. There live in paris at the site of the massacre. I want to get now to phil mattingly, who is at the white house. No ok. Phil mattingly in tennessee. Give me the reaction so far weve heard of course the president and the u. S. Offered every type of assistance that they can give to france. What else is the president going to do . What is the u. S. Intelligence agency here going to do with the information thats unfolding in paris . Well, betty obviously u. S. Officials closely monitoring whats happening this morning. Havent heard anything from the president specifically today but white house officials also monitoring the situation, their National Security team very closely. Betty i think whats most interesting, and hans eluded to this a little bit, but u. S. Intelligence officials have made very clear that these two brothers, the two main suspects here were well known. They were on u. S. No fly lists, they were on u. S. Known terrorist list. I think the main concern youre hearing is the french Intelligence Community was also aware of this. Even though these two brothers were well known they were still able to pull this off. I think one of the immediate concerns right now is how is that possible. I think broader, something u. S. Officials have been concerned about, the white house included is is this part of some broader network, part of some broader plot. There hasnt been a lot of evidence leading anybody to draw that conclusion yet. I think when you see things that are happening, this is the type of thing that sets off alarm bells. Thats what the officials will be focused on again, trying to get the bigger picture. They can add a lot of heft when it comes to the intelligence connection. Intelligence trying to make the full picture become clear and that will be their primary focus. Congressional reaction has been what so for phil . Obviously very supportive with france, of for instance, i think willingness to do and offer the same type of support the president will. Anything the u. S. Can do to help, i think the interesting thing betty is its a new congress, a lot of stuff going on right now, when this becomes a sole focus, if it becomes a sole focus whats the reaction going to be. The general reaction is the pendulum will swing hard from a lot of law make eshes into moving closer towards a more secure state. What can we do on the intelligence side, what can we do on homeland security. How that debate plays out there be interesting to watch. As of now betty the unified support across the board with the president s offer to do whatever the u. S. Can to help the french. All right phil, thank you so much. Phil mattingly our White House Correspondent in knoxville, tennessee. Traveling with the president. Back to our other top story. The all important jobs figure, less than 30 minutes away, well get the final piece of data on 2014. The employment picture shapedup to be pretty good in 2014. We gained something almost to the tune of three million jobs in total since the recession. Joining us now to discuss more about the jobs report is our Bloomberg Economist josh wright and also bloomberg stocks editor mike reagan. Josh, the biggest thing youll be watching for this jobs report is what . The number one thing is what will happen to the actual pace of job creation. 2014 was a great year on a 12 month moving average basis. This is the highest rate of job growth weve seen since 2006. The question is do we have an upswing at the end of the year, we had that upsurge to over 3 million jobs in november or are we going to go back to trend. And the feeling is . The expected tations is were going back to that trend. If we turn up maybe the economy will overheat domestically. Mike, we heard so many naysayers on this rally that we saw in 2014, but if you look at the jobs picture it seems to make perfect sense that we would have rallied. Josh said its been a strong year, really not a ton of huge surprises in the jobs numbers. I looked at the last six reports and the market reactions, it hasnt been a revolving reaction to any of the reports. The biggest move after jobs report was about 1 . But five of the last six, the market has ended the day higher even though it missed estimates on three of those reports. So the market is pretty comfortable with the pace of jobs growth, its been strong. I wouldnt necessarily expect a lot of volatility from this report today. That of course anything can happen with the way this market is swinging. If there was a big surprise. What about the oil price though . We keep hearing net is going to be a positive for the economy, consumers will spend even more. But i imagine though that this is going to result possibly in these job losses, in the energy sector. Could that then impact stock markets . Absolutely. Its, the big question is obviously how long is oil going to stay this low, you know. If you look at any corporate budget and not just energy companies, all the Industrial Companies that cater to the fracking boom in the country, theres a big question mark on what the price of oil will be. Looking at earnings estimates they come down pretty dramatically. The s p 500 are expected to increase only by 2. 4 in the fourth quarter. Thats down from estimates of about 10 before oil peaked in june. Its not uncommon, but that is a pretty noticeable drop down. A big 19 drop in Energy Company earnings. But not necessarily an increase in so its not going to be at least in this quarter, there might be a late effect. Definitely something to watch. The jobless claims numbers we havent seen yet the jobs from the oil price decline. In fact jobless claims dipped in a state like texas that is so dependent on oil. Exactly. What we saw over the last month is jobless claims did drift up a little bit but theyre still below that key psychological level of 3,000 a week. Thats all good news but holding steady. One of the things, part of why the markets may have been responding in a relatively none volatile way is 2014. The job growth has been so steady. We have one or two misses but its been a study of recovery and with the fed communicating that the policy will be linked to that, i think thats why the if the numbers stay in line. It sounds like well stay on this 250 27 po . It was 240 and that is exact the expectation for today. All right josh thank you very much. Stay with us, were going to get the december jobs, in a moment well talk to a c. E. O. Whos adding hundreds of jobs where hes located. Plus were going to keep bringing you the latest from france. As we wait the governments all important job report, the last one of 2014, i want to highlight one company that is actually hiring. The company that went public with bostons biggest job creator in 2013 could retain that title after this year as well. Helped by a hefty tax break way fair plans to bring another few00 new jobs into the city in 2016. Great to have you back on the program. In fact we have a tally of the hiring that youve done over the last several years. What would you say is the single biggest factor, other than the fact that youre growing like gang busters here in this country. Whats helped you the most in being able to hire . Well you know obviously were hiring because we are grewing so quickly. In terms of what helped us hire, the truth is a lot of the jobs were looking for, whether it be engineers or data scientists or all these stem type jobs, or it could be marketers and more chents but who have to have deep analytical skills. One of the things that helps us is being based in boston when you think about the talent pool thats available. Because youve got the universities, young people is that what it is . Exactly. The right of industries that are there and the educational institutions. All the young folks coming out of school with these types of skill or who have the an attitude and frankly we can help them train up. We added a thousand people last year so weve been growing at a good pace and having access to talent is really key. Are you paying more or less nrt same kind of talent . The kind of talent were looking for is definitely in very high demand. We do find its a competitive world, we end up paying a fair amount, the salaries do keep going up. But again those skills are so key thats how we move the business forward and thats how we were able to grow so quickly last year. Our direct Retail Business grew 57 . So that type of growth is coming out of all the things were working on. You mention that you are paying a fair amount and those rates do continue to go up. So whats going into the wage discussion with some of your highest demand type of employees . Yeah, so, weve kind of figured out what we think the appropriate rates are in the market. We keep a very close eye on whats going on. So that allows us to have really good parity. We have a very strong culture, so its sort of depending on what kind of skills you have, we bring you in at certain levels. Obviously you can rise at whatever pace of skill, development and productivity you have. Were really encouraging folks to do as much as they can and get rewarded for that. I think the truth is these skills are just i think very key to the future. So i think these are the types of folk every companys looking for. I think that thats what drives the salary. Like the belle of the ball if youre a developer or coder if you know anything else, youre a great marketer, you are certainly in demand. Now, we had you on, i remember when you i. P. O. Eed back in october. The markets were extremely volatile afterwards. Your stock price has gone down since the i. P. O. So tell me how are you surviving that . One of the things we did, our company is 12 years old and we still view it as the early days. So even though we have over a billion dollars in sales on a trailing 12 month basis we still think its very much the early days. You can see our growth rate tied to that. So everyone in the Company Knows look stock price cans move up or down in very volatile ways. And weve really preached the warn buffet quote, in the short run, stock markets of the voting machine, in the long run its a weighing machine. Weve been successful because weve always taken the long view and a customer oriented view. Were going to keep growing, keep being increasingly successful. I really have no doubt overtime the stock price reflects how successful or not successful you are. And i think were going to be very successful. Boston is glad to see way fair. I want to point out mark zuckerberg, who had started facebook in boston, took his company out west. And ever since then people in boston have said can we get out of the curse of zuckerberg. Do you feel that finally you have helped in that . Yeah, i think boston doesnt get kind of a fair regard for all the Successful Companies that are in boston. Were obviously in boston. Trip advisor 10 billion market cap, great consumer net company in boston. Theres a lot of Great Companies but clearly silicone valley huge center for internet. I think if you start ranking places, im pretty sure you would find boston very high on the list. We love being in boston, the talent is incredible. We think its a great city in which to build a business. Thank you so much. The way fair co founder and c. E. O. Well be back in two minutes. Ah, got it. These wifi hotspots we get with our Xfinity Internet Service are all over the place. Hey you can stop looking. I found one. See . What do you think a wifi hotspot smells like . Im thinking roast beef. Want to get lunch . Get the fastest wifi hotspots and more coverage on the go than any other provider. Xfinity, the future of awesome. More breaking news coming out from the hostage situation in paris. In fact there are two now developing. There is one in northeast paris, and now there is a second one where there are now reports of at least two death. Caroline tell me the situation and these reports of now two deaths of the hostages . Yes, these reports have not been 100 confirmed we the authorities, but there is definitely a second hostage situation taking place which is east of paris. It theres been some reports that this gunman is the same as the one who shot dead this police woman yesterday. He has been linked to the brothers who are also taking hostages northeast of paris near the airport, where i am right now. So of course all the Police Forces have been at that site trying to surround the small Publishing House where the two brothers are at the moment. The police force are moving to the second hostage site. Its happening in a small Kosher Grocery store and now between five and six people and the gunman is an african type man who is carrying and who is believed to be the same gunman as the one yesterday. Caroline, how are Security Forces securing down the area . I mean what exactly is going on . Has trons par tationhalted . I understand reports of the School Children have been told to stay in their classrooms and those who are in their homes are obviously told to stay inside. Thats correct. So where i am so the Industrial Zone where the two brothers are is on the outskirt of this town. We have 8,000 inhabitants. And we see the whole site is secure the journalists have been taken about two kilometers down the road, and down a bit south of the site is a Residential Zone where you have four primary schools, a high school, and the secondary school. Some of the schools have started taken them out of the site. I actually have a Family Member who is a teacher in one of the schools which is the closest to the site. She told me that theyre confined inside. They are keeping the children obviously away from the windows. The children are lying on the floor in the hallway. Theyre trying to ask them to not panic, but of course parents of these kids are very panicked parents, have been coming here asking if me had more information because most of theme are still contained in the schools. A terrifying situation for them. Caroline, thank you so much. Lets get back to what is going on here in tust. We are a few moments away from the jobs report. Were on the market right now and equity futurers are pointing to a lower open. This was the last job report of 2014. 240,000 jobs expected to have been created in that month. And we are going to be on that in just a few moments. In the meantime tim cane from the Hoover Institution is joining me with a preview, quick preview tim. The biggest thing youre going to be watching for in this jobs report is what . Well, the headline numbers are always worth paying attention to, but im really interesting in the employment population ratio and the Labor Force Participation. See if those keep bleeding. Thats been a long trend for the last seven years since the recession started. All right. Tim, just hang on because we are Just Moments Away from this labor report. Ive got full coverage of the jobs report. Were going to get all the reaction, and let me just go through what we are expecting, 240,000 jobs to have been created in the month of december. Private payroll the jobless rate, which has been trending lower and lower through 2014, that is expected to be at 5. 7 . 252,000 jobs added in december. Unemployment rate drops to 5. 6 . Wages are going in reverse. Negative number month over month. The big gain we saw in november was revised downward. The wage side may be the big news. 250 2000 jobs added in the month of december. Better than our forecast. The best month we have seen since june 2012. The 2014 total, 2,952,000 jobs created in the United States. That is the best year since 1999. The Unemployment Rate, dropping to 5. 6 . That is approaching the feds own forecast for full employment. The to submission rate dropping again, back to 62. 7 . The number of unemployed rising. The number of unemployed falling. Longterm unemployed essentially unchanged at 2. 8 million. A big jump in construction. Food and tricking establishments, 48,000. Lets talk about the wages. Falling by 02 month over month. 0. 2 month over month. Production in nonsupervisory employed, falling wage wise. Some mixed signals for the Federal Reserve and janet yellen. It is the wage side of this that is going to be the . Question mark. You got it right on the money. It is the wage growth we have seen in december that is a big surprise. You are monitoring the markets and have they are how they are reacting to this. People are counting on the Federal Reserve to stay lower for longer. Looking at the 10 year yield, it came down to 1. 964 . Begin the morning at about 2 even. If you come to this green over here this is a big move up in futures. This is the uneven line, the unchanged line. Hang on for one moment. Tim, let me bring you back into this. One of the things you are watching which is wages, a surprise drop. This report tells us that there is great news in the short run, but the whole is so big. Hole is so big. The damage from the recession was so bad. We should look not at monetary policy, but what are the fiscal policies pushing people out of the workforce that leads to that slack and lower wages . We have heard there is not much you can expect on the fiscal side. I feel really bad for people who are at the fed. They basically have a gas pedal. They can stimulate. A lot of people think the minimum wage pushes people out of the workforce. A newly rejuvenated republican party. They will suggest that some of their proposals on capitol hill they will change the work week back to 40 hours and that will make a difference they say. I think people will look at the numbers and see that wage gains have to come if you are seeing this kind of job growth and that is going to raise a lot of questions. The president wishes he could be talking more about wage gains when he is in tennessee today. I imagine that. The lack of the wage gains we have seen, it makes americans feel as if they are not participated in the economic recovery. Tim, what do you think can be done on the fiscal side this year in congress in washington . I think this issue with tweaking the aca will be where the fight will be in the republican party. There are republicans who say pushing people to parttime work is not a healthy development. It would be nice to see the white house offer changes. A quick check on how markets are trading, reacting. We have stabilized of the gains for s p, dow nasdaq. It does look like we have turned around to a situation where the market will open higher. Right now, we are looking at gains in u. S. Equity index futures. The dollar is now a little bit stronger relative to where it was before the numbers came out. The 10 year yield is at the low of the session. They are in the green right now. Think you so much, peter cook. Thank you to tim keen. We will get the view from the white house. How the white house is going to answer this report . 10 minutes ago, we got a picture of how the labor per did shape up report did shape up. With us now is the chief economist of ias. Ihs. You were a little bit bearish on december. Why is that . It is just that the november number was so fluky, it was so high. We figured there would be some kind of putback. The good news is, it was higher. I will take that in terms of economic growth. There are some downsides. Peter was talking about the wage number, the decline. The drop in the Unemployment Rate was almost entirely due to a drop in the labor force. That is not good news. That gives me pause. This could delay a rate raise. As tim was just saying, we may be in a new paradigm where we have rising and improving labor market but we continue to see the Labor Force Participation rate decline or at these lows. It used to be that you could not have both happening at the same time. Are we in the new era and the labor market. Demographics are playing a role. To continue to see these drops that is cyclical. This drop of 0. 2 in wage growth is this a fluke because it is december or what . As you know, these numbers bounce around on a monthly basis. I think it is a fluke. We are probably still averaging around 0. 2 positive. That is an indication that there is still a lot of slack in the labor market. And that means what for the fed exactly . Waiatit, basically. [laughter] for how long . To see how things develop over the next few months. We are all saying that they are probably going to raise rates in june, but my guess is that they may wait until the fall sometime. It also raises the question that perhaps the labor force are jobs market should not be the only thing that the fed pays attention to. You are absolutely right. Are we on the industrial side approaching capacity limits . They are looking at what is going on overseas and the crisis situation that seems to be developing in other parts of the world, greece for instance. The fed kind of recognized a little bit about what other Central Banks are doing. How does that plan . Play in . They are clearly worried about what is going on outside the u. S. Growth is weakening in china week in europe, week in japan. Weak in europe weak in japan. It seems to be that the u. S. Economy seems to be rising above the global funk. It is a little confusing for them. We have shrugged off a little bit of the bad news. How long we can keep doing that is the question. I want to ask you about oil. What about the jobs market . Do you expect that to have a huge impact Going Forward . We expects stronger growth in the u. S. Because of the plunge in oil prices, but you have positives and negatives. You have few gain huge huge gains in airlines, trucking, etc. Thank you so much for joining me. We will hear from a home at elerian in the next hour Muhammad Ali Arian in the next hour. Stay in the loop. This is another example of how fast moving the situation is. We are getting news that no victims are reported in the second hostage situation in east burress in a supermarket. Chris in a soup paris in a supermarket. The French Interior Ministry Says there were no victims. Earlier, you had to separate News Agencies reporting to deaths. Two deaths. Schoolchildren in the area are being confined and not able to leave the premises. The suspects are one woman and one man, perhaps there is more than one person involved. It would now appear there are two people involved in this hostage situation in the southern part of paris. This is a separate situation to the one at Charlie Hebdo. There is still a standoff between the police and the two gunmen in northern france. There are no victims in the northern paris incident. Lets get back to the other top story at home, which is the jobs market. We just had a report out a few moments ago that showed a healthy gain in jobs. Employers added 252,000 jobs last month. The jobless rate fell to the lowest level since 2008. The president of honda vowing to improve quality and safety standards. His remarks came after the u. S. Find honda a record 70 million. The fine also covers hondas failures to report word to claims. General motors ceo says this year may be better. We have much more ahead for you. Continuing coverage of the jobs board as we head toward the opening bell. We will be back. 978 million. Ham asked for the award to be reduced. Has fortune has been hamms fortune has been slammed by the settlement with his exwife. Futures have lost some of their gains. You saw a bit of a spike after the job numbers came in. We will have much more on the market reactions including Mohamed Elerian joining us in the next hour. Welcome back to in the loop. Futures opened slightly higher. It ended up being the best year for job creation since 1999. Party like its 1999 . I dont know. Employers added jobs that beat analyst estimates. About 3 million more americans found work in 2014. That is the most in 15 years. The jobless rate fell 0. 2 to 5. 6 . I want to turn to france. French special forces have cornered the suspects in the paris massacre two days ago. There has been a shoot out at a supermarket in paris, where a gunman or two gunmen have taken hostages. The suspects in the murder of 12 people are holed up in a Printing House outside of paris in the northeast. They have one hostage, according to reports. They have told police they want to die as martyrs. One of the suspects reportedly trained at an al qaeda terrorist camp. Apparently, a single gunman has taken hostages at a kosher market. It is also not known how many hostages there are. The could be five or more or less. It is not known if this attack is linked to the others. I want to get to our bloomberg International Correspondent, hans nichols. He is at the scene of the second hostage situation in eastern perilous paris. I have just arrived and there is tight security. There are several rings of police. Police up police, ambulances and fire trucks. What we believe we know inside is that theyre up to five to hostages five hostages inside the Kosher Grocery store. The link is that the two brothers who are in the northeast of paris, they are the ones that are suspected of shooting up the magazine 4850 hours ago. Yesterday there was a shooting in the south of france for a Police Officer was left dead and one other official was injured. There was a link between the two brothers and the suspect in the second shooting. There are also some reports that there are a man and a woman suspect. It is a fastmoving story. You can see the city of paris has been put on lockdown, on shutdown. I can quickly get to 80, row upon row upon row. Heavily armored swat teams as though they were bracing for combat. We have conflicting reports. There was reportedly issued out at the first sight in the northeast of paris. There was also issued out where you are at the supermarket a shoot out where you are at the supermarket. The interior ministry came out later and made the mistake that there are no victims. No shots were fired at the victims. There were no reported deaths. What can you tell us on the status of that . There is a lot of noise on social media, as well as local police reports. We should always just wait until we have official confirmation from the interior ministry. The interior minister was dispatched to this location by the president just about an hour ago. He is at a command and control center. Until we get official confirmation from government officials, it is best to keep a lot of these reports but you get the level of fear in paris right now. It turns out that an awful rumor turned out to be true that there was a hostage situation at a Grocery Store in central paris. Outside of these two areas what is going on in the city . Are people off the street . Is transportation running as normal . What is it like outside in these two precise areas . There are some 800 additional security guards around the center. Other than that, the city is functioning. There are vigils that have been cropping up every few hundred yards, especially around Charlie Hebdo the offices of Charlie Hebdo were you see flowers upon flowers. Candles were burning all night last night. Thank you so much and we will stay with you as you monitor the situation at the second site where there are reportedly several hostages being held by at least one gunman that we know of. Back here in the u. S. , the economy we saw in december that we added 252,000 jobs. The jobless rate dropped to 5. 6 , wrapping up the best year for the labor market since 1999. It was not all good news. Earnings unexpectedly declined. Wages unexpectedly declined from a month earlier. Joining us today deeper into the report, Joe Weisenthal. Wages has been one area you have been focused on. There is hope and there is reason to argue that wages are going to rise. As we get closer to full employment. The decline is a pretty big surprise. We are used to mediocre gains, but the actual decline month over month. Last month, the nonfarm payroll was revised significantly higher. It is definitely one of the huge stories. Without much wage pressure, that is one less reason for the fed to feel like it needs to raise rates. It does not take you off of your premise that you think wage growth was going to be stronger in 2015 . We still have the same conditions in place. We are getting closer to what would be described as full employment. Why isnt pressure mounting . Is it becomes we are seeing job gains in lower paying jobs . It is probably a mix of things. There is a disbelief that the actual rate of unemployment is better due to the fact that so many people have left the workforce. And they want to work more. That is also just general structural shifts in the economy. Other demographic aspects Older Workers to make more are retiring being replaced by younger workers who make less. What was the Tipping Point . You have to get to a point where you have more industries saying we are experiencing labor shortages. We see them in a handful of industries. I think if youre an engineer, you are doing very well. Absolutely. When that spreads to more industries, you would see widespread wage growth. Underemployment is what you are looking at. I was wondering if we have this entire level doubledigit on them underemployment. The big story in the past couple years as we have seen growth of jobs in energy. Mining, we saw 3 or 4 unemployment in north dakota. Now the tide has turned perhaps a little bit. The labor market may get looser in those areas. Guys, stay with me. We will continue to cover the jobs report and the reaction in the market. Still ahead, former pimco ceo and bloomberg columnist Mohamed Elerian and what he thinks of the labor force. The u. S. Government might be adding more jobs, but that isnt stopping companies from cocacola from cutting them. More on what the soda giant is doing. We continue to count down to the opening bell on this job stay. Jobs day. We have more snow than we had all season long. Jonathan, in the midst of the traffic, we got the jobs report and it came in better than estimated. The biggest importance is not how the market reacts, but how the fed reacts to it. Jobs appear to be reasonably abundant. Wages do not appear to be running away from us. If wages were picking up, it would force the fed to move earlier. How much of a fluke is that . When you actually get below the numbers, there is a lot of detail here. Some of the areas of weaker wages are in those energy stocks. I mean the energy sectors, not the stocks, where they have been high wage positions and there is less demand for them. There may be some distortion from that. It is important to note that any given single report is not going to necessarily tip the balance. It does not make the trend. One thing you have noted is that it is not the level of inflation with a level of prices that we need to be concerned about, but the pace. That is what you think is more important to Pay Attention to. If you look over time and see when does the fed move or when does the economy come under stress, it is when the fed gets surprised and inflation starts to pick up more than they anticipated. Investors right now are expecting that the fed is going to start moving sometime in the latter part of this year. It means they will move slower than they ever have in history. If the fed stays on that path, stocks will rally for the next couple of years. If wage pressure starts to pickup, the fed is going to feel like they are behind the curve. The bottom line if i can read you correctly if we have wages around this level, we have inflation around this level, 25 basis point hike in Interest Rates is not going to do very much for the market. Absolutely not. The last two cycles stocks rallied for two more years after they began. Even if they were to move in june of this year we are talking about clear territory all the way until the late part of 2017. This might still be a winwin for the bowls and equity. Bulls in equity. We may have to look for a new emergingmarket acronym. Members in this club seem to be shrinking. A Discount Chain may be in the works. Much more on that story straight ahead. Welcome back to in the loop. We are following jobs. Apple said that it has created one million jobs in the u. S. They said the app store saw 64 increase in sales last year. Normally, when a Company Comes out to suggest they have created one million jobs, you have to be skeptical. Honestly, apple has created a whole new economy here. There is no doubt they have created a whole new economy. Companies are about innovation and destroying jobs because their industries that have collapsed Traditional Telecom areas. Yes, it is true there are a lot of apple related jobs. But a lot have disappeared. I do wonder how many of the jobs they have created have created a handful of millionaires i wonder how many of those people are working parttime, underemployed. I doubt any of these self start entrepreneurial app makers have health insurance. Cocacola will cut as many as 1800 jobs starting today as the company tries to reduce costs amid a slump. I wonder what Warren Buffett thinks about this these new costcutting measures. He was very silent last year when David Winters was lobbying for changes. You understand what coke is a Warren Buffett company. It is an incredible brand and has been around forever. On the flip side we have had a big secular decline in the demand to drink sugar. People dont want to drink high sugary soda anymore. Can coat cut cost . Sure. Nobody is asking that questions. But if you dont have a business that is thriving coke needs to i think they need glutenfree cokes zero. [laughter] the magic formula. The green cans. May be coconut coke. Coconut water coke. It would be interesting. I hate coconut water. Im sorry. [laughter] macys is already known for its frequent sales and promotion and is thinking of starting an offprice business for its namesake brand. It has hit some things right. People are price conscious. Macys have been doing everything right. You have seen it reflect on the stock price. They have the best return policy on the planet. It would only make them better to have an outlet center. Will they go the way of ralph lauren and start producing merchandise wholesale intentionally for the outlet . Yet another place to shop . Im sorry, but it seems like we are so over retailed in this country. Every other day, there is another new retailer whether it is physical or online opening up. That is definitely true. It is hard to get to bullish. The one thing that probably makes sense are these very premium experiences shopping. Maybe at the extreme low end to o. For macys, they have done relatively well. This is about clearing merchandise. I know it is a doubledip, but it makes sense in my humble opinion. Brazil and russia. They may be in danger of being a part of bric if their economies dont revive. Instead of the bric it is the ic. I dont know. Tghehe c might be in danger too. The first decade of the century was about these huge emerging markets. To got very bearish on the u. S. People got very bearish on the u. S. The gap is once again, the u. S. Is seen as the safest, strongest economy in the world and these other economies that people got so excited about it is the acronym of the another era. The ics are the only countries going in. People are not as excited about chinese growth as they were several years ago. For several years, people were saying the correlation between the bric was always dicey. As we near the opening bell, the breakdown is on the markets. We are settling in unchanged ahead of the open. Welcome back. Lets get back to bringing you the top stories you need to know before the bell. Number one is the jobs report. The Unemployment Rate is the lowest level since 2008. But again for americans at large they are not feeling this improving jobs market. Wages are not improving, neither is the Labor Force Participation rate. It is a disturbing trend. One thing is that surveys of americans have been on the rise in confidence. A lot of people a lot of it has to do with gas prices, obviously. On the Labor Force Participation rate, i think people might have to say, this appears to be driven largely by demographics. We are seeing strong gains in the job market and the russian people are still not getting it. There is the generational shift. Baby boomers are retiring. Every bite everybody my age is just comfortable getting not getting a raise apparently. [laughter] one thing that you can at least say is that let us wait until the next numbers. This could be a fluke when it comes to the last of wage growth. If anything, it would seem to be more normal. If we just go back to 0. 3 . Some of this must have to do with seasonal hiring. Im sure they try to adjust for that. There are definitely seasonal issues. The Bloomberg Economist was talking about that yesterday. There were some weird seasonal things that happened in november and december. The quick question is, what about the fed . What does all of this mean for the fed . It has been curious to watch and see it unfold. We are all waiting for 6. 5 percent unemployment. We now have 5. 6 unemployment and the fed is holding steady. I suspect the fed would like to hike rates get off zero, and and this extraordinary period of monetary policy. Without any inflation pressure showing up anywhere and with deflationary pressure coming from energy, i think they might just say a person really enjoying this is president obama. He will be victory lap in detroit. There have been 58 consecutive months of job growth. Regardless of what the fed wants to do, toby 14 was the best month for your for job creation and the country since 1999. Oil prices have done the job of erasing of fiscal policy . [laughter] of erasing Inflationary Pressure on that front. The strong dollar has done the same thing. It might be the janet yellen needs to stay on autopilot. There is not a whole lot that needs to be done. The story of the economy is that there is no story. Solid gains, but nothing is so hot that it is causing anyone any problems. Joe, you cannot admit that on tv. [laughter] oh right. The most important jobs report in a long time. [laughter] the ecb is no test piloting what it would be like to put together a plan for quantitative easing. What if we started with 500 billion . Are they pushing on a string . If they move the german fiveyear negative, what is pushing bond yields lower . What is that going to achieve . I have heard no compelling arguments that this is going to make a big difference. It is very sad. We got the number of 500 billion. It reminded me very much of qe2 come on when the fed preannounced how much it was going to buy. Then they said they should have done something more like they did later. The ecbs several years behind where the fed was in terms of using policy. Way behind the curve. We had two big days of gains. The benchmark averages are in positive territory. We started to see big selloffs. It seemed like everybody was worried about greece. I know you are heading to athens to cover the upcoming election. How worried should we be . I dont think that greece itself is going to have a big impact on Financial Markets especially not the way it has a global impact. I do think the broader story losing support and no longer playing ball, it will be interesting to see whether the political deterioration continues across europe. In large part, it seems like people dont think this will deteriorate. People are not worried about the financial contagion, the way they were. There is not this fear that suddenly the markets will lose confidence. This is more of a slowmoving story. Every time there is an election in europe, we have to watch these moments and these fringe parties gain power. You could not ask for a more will broadcast pricing going on in greece. We all know when to watch. Exactly. Hang on. There is breaking news out in nebraska. The high court clearing the way for at least one hurdle for the Keystone Oil Pipeline to be built. They are kicking it back to the president to make a decision. I want to get to peter cook, the chief washington correspondent. This has been a decision that everyone involved in keystone has been waiting for in washington. The president has maintained that the proper review process of the federal level could not move forward until nebraska had decided to legalize the routing of the pipeline and that has been resolved. It will put pressure on the administration to render its own decision, as to whether the Keystone Pipeline should move forward in the national interest. The house of representatives is debating the latest keystone legislation that would bypass the president. Then the pressure will be on the senate to do the same thing. Then the decision from the president whether he would veto the legislation or he might sit down and work out a compromise with congress or perhaps green like this project on his own. Eventually, the sense is that this pipeline will be built. It is really hard to say at this point. This has been a decision that has been in the president s court for six years and he has so far not said whether he would back it or oppose it. His most recent comment on this project is that republicans have pushed him to finally back it. He has been much more negative in terms of town. There would be canadian oil moving through the United States destined for exports to other parts of the world. Supporters suggest this is a plus for the United States. They think they have overstated the benefits. He has not definitively ruled it out. They want to complete the review process in the United States. The big question is is it in the nations interest . It is on his plate now. The decision paved the way for a much more robust support by supporters. Thank you so much for that update. Thank you to Joe Weisenthal and olivia sterns. Thank you for staying with me through the opening bell. You will not want to miss the upcoming interview with David Fuhrman the chairman of economic advisers onthejob send the keystone news. Mohamed elerian is going to be joining us to give his take on where jobs are headed and where the euro is. Stay in the loop. The surprising jobs report out this morning. The u. S. Economy added 252,000 jobs. I want to get some reaction from the wyman white house, from david furman. Also joining me now is Bloomberg View columnist and former pimco ceo, Mohamed Elerian. Jason, i want to start with you. Is the president prepared to make a final decision on keystone given that this was one of the hurdles he mentioned that he needed to wait for before he would decide on keystone. This is a process that is being undertaken at the state department and there are a lot of elements to that process. I dont have anything new to say to you about that. I have not looked at the decision. Does it not change the game in some ways without the president goes about it . This is a process that is happening at the state department. This is one part of what the state department is doing. Mohamed tweeted about wages right afterwards. Why did wages reverse in december . All the headlight numbers were above expectations in terms of jobs and unemployment area i think it is a mistake for any indicator to look at just one month. Lets look at all of 2014. 3 million jobs, the most since 1990 nine. Unemployment rate down one point 2 , the most since 1983. Lets look at wages. Real wages were up about 0. 7 . We would love to see them rising more than that, but they bounced around from monthtomonth. We did see real wage growth. What about you . Is this really a throw away on this wage decline . I would agree with jason. We should not take too much from a single number. The report was a whole strong as a whole. The tension between a cyclically improving labor market and then there is this secular concern, longterm unemployment is still stuck at omas 3 million. Almost 3 million. That speaks of the need to do more to improve the potential of this country. This is a strong labor report. It caps a strong year. It is a matter of time until wage growth starts to turn up. What can be done in 2015 to make this a better year for the longterm . I very much agree with what he is saying. I do think we need to be focused on wages. I think it is a significant challenge, but it is a secular challenge. It is one we have had for decades. That is why the president is out there talking about making Community College free for two years, one of the surest ways to get a wage increase in the country is to get some higher education. That is why we need to raise the minimum wage. It is also about expanding the size of the pie by investing in manufacturing. Investing in infrastructure. There are a lot of things that have gone into the set of secular challenges is talking about mohammed is talking about. Secular challenges aside, can the president say that the u. S. Economy has firmly turned the corner . Absolutely. We have seen an acceleration in the u. S. Economy. Whether it is jobs, the overall economy. Whether it is fulltime jobs the acceleration and good middleclass sectors. I was not sad to see the slowdown in the case of jobs and the temporary Health Sector over this past year. Overall, the u. S. Economy is performing well and it is performing increasingly well. We just need to see even more of that trend. Jason, thank you so much for joining us. Mohamed elerian the former pimco ceo and Bloomberg View columnist, he will be staying with me to talk about job growth and turning our attention to europe as well. What the ecb might do later this month. We will be right back. We are back with Mohamed Elerian. The stock prices are all in the red right now. We thought that given the lack of Inflationary Pressures, you might have some people saying, you cant raise rates. Oil again is inflaming enough of a base. The report points to puzzling growth. I understand where the market is the wage issue is a puzzle. It is not going to keep the fed on the sideline. It is going to take it as a cue to start hiking rates very gradually and with a destination point. Your view is that the fed will move sometime in the summer of this year . Yes it is. Is it possible that the fed might start looking at other barometers . It might. But it also needs to look at financial stability. The minutes that were released yesterday pointed to the rest of the world using the word important twice. It is an important Downside Risk for the u. S. Economy. If things really deteriorate in the rest of the world, that is what you would need. It is not lift off, but it is solid recovery. Thank you so much for joining me on this job stay. Yet again, Mohamed Elerian. Thank you so much. Great to see you. That does it for today on in the loop. That is the latest on the fastmoving developments. We will keep our i on the markets in the u. S. It is 56 past the hour. Bloomberg television is on the markets. We are 30 minutes into the start of the u. S. Trading day on this friday. Right now, as we take a look at where u. S. Stocks are trading they are down by 0. 3 following the jobs report, in which we got an increased number of jobs added but wage growth fell compared with the previous month. Moving on outside of equities into treasuries, no change there. 2. 02 . The dollar index is little changed right now. Nymex crude reversing course and it is down 1 . It has look like it was on a way to a third day of gains. Staying with oil, a lot of people are looking at oil saying that it is an opportunity to get in with oil trading below 50 per barrel. We are going to be speaking now with bloomberg etf analyst eric bautunis. When people look at oil etfs, it is not just one you have to underline, but also companies involved. Thats right. There is a multitude of ways to play this. That is part of the problem. There is no direct way to play oil prices, unless you store oil in the backyard. You can track futures contracts, which dont perfectly track the price of oil. This tracks near month futures of oil and it has sensitivity to the shortterm movement in oil. Over the longterm because you are managing the futures contract and you have to roll from one month to the next and a lot of times the next month is higher, overtime the role cost corrodes the return. Spot oil was down, it was up 77 , u. S. Oil was up 10 that year. Even though shortterm over the long term, it is a big differential. That is why people should beware as buyers. What is that on the downside . It is a good point. It captures a little more of the downside. You get burned a little harder on the downside. Does it affect the creation of demand for this product . You would think. But there have been 600 million in the ctf in the last month alone. We have seen this before. People trying to call on oil and they are using this one before. Pete people are trying to call a bottom. What about gas in exploration versus oil services . Exxon, chevron, people are loving this to call a bottom. The bad news is there are other issues with the stocks, the way their managed, company issues. An alternative is the industry level. The explorers, the services companies. These etfs are largely small caps and the equal weights. The good news is they are very volatile. That sounds like bad news. When oil does bounceback him of the small caps usually pop better. For people trying to call bottoms, it was a good idea. Not for the fainthearted. We are on the markets once again in 30 minutes. Live from bloomberg headquarters in new york, this is market makers, with Erik Schatzker and stephanie ruhle. Dramatic day in france. There is a shoot out at a kosher supermarket. Labor market parties like it is 1999. Decembers unemployment report all caps a 16yearjob creation. Rebuilding haiti the country is still struggling. Our private investors the answer . Good morning, everybody. You are watching market makers