Transcripts For BLOOMBERG Bloomberg Surveillance 20160304

Is this ok . Francine its fancy. Its perfect. Tom we have eight things to talk about at the start of the show. You mentioned the e. U. In your opening. Were oblivious to this. This turkey my deprant discussion, im sorry, for all of europe, its the only topic this weekend. Francine it is, because it goes really to the heart of what europe is. As soon as that gets into question, the eurozone can close. Tom well, there we go. We got so much to talk about today, jobs take. Francine lets get to the bloomberg first review. Thanks, francine. Donald trump was on the defensive during last nights republican president ial debate. Hours after 201 nominee mitt romney called him a phoney and a fraud, the current proper candidates took their shots. Heres marco rubio. Senator rubio theres no doubt approximate that. These also say 2 3 of the people that cast the vote have voted against you. They do not want you to be our nominee. And the reason why is because we are not going to turf over the conservative movement to someone whose positions are not conservative. Still they said that if trump wins the noam nation, they will support him. North korea leader kim jung you know has ordered forces to be ready to launch Nuclear Warheads at any moment. That came after the country test fired what were described as shortrange project tiles, plus north koreas leader warned the country to prepare for the impact of those new United Nations economic sanctions. The u. N. Says its close to a deal with syria on humanitarian aid. The International Body wants to deliver medical supplies to areas held by rebel forces, but the Syrian Regime has made it difficult. Meanwhile, the shaky ceasefire is Still Holding almost a week after it went into effect. And in the u. K. , lawmakers say a program to strengthen the border is eight years later and over budget. The system was designed to catch terrorists and criminals as they come into the country, but a Parliamentary Committee it says may not be fully operational even by the end of the decade. Global news 24 hours a day, powered by our 2,400 journalists around the world. Tom . Tom thank you so much. Lets do a jobs nondata check. We have one difference. Well get to that in a moment. S p futures inched down to fractional. Im bored. On to the next screen. The v. I. X. , 16. 70, showing shock at better equity markets. That was me that six weeks ago said go to cash. Go to cash. Go to cash. That was wrong. 17,000 on the dow, rounded up. Heres the story. The 0. 83 is a big deal much the german twoyear made a new record low this morning, 0. 586. Were in that vicinity t. Just wont let occupant german twoyear. Francine and this is five days until we have the e. C. B. , where were expecting them to possibly go to negative territory. Watch out for european stocks as well, flat at the moment. Shanghai, this is i think a huge story. They support the stock market on friday. We know the parliament is meeting. Then i went rogue. Emerging market currencies and stocks heading for their first week since october. Rising Commodity Prices are luring investors back in, tom. Tom dollarruebel was 80. Lets go over to the bloomberg terminal. Were going to show this a lot today. We got drew mat is to get us going, and weve got robert for done with the most Controversial Book on economics right now. Were going to use this with professor gordon of northwestern later. Back to world war ii, good animal spiritlike growth. Then we get the inflation, the money illusion of the 1980s. Paul volcker comes in and here saves the day. Down we go to this new dampened animal spirit in the trendier goes to the rise and fall of American Economic growth. Heres obviously the recent great distortion. Francine this is hugely important, tom, because were going to try to link the politics and the rise of donald trump to what were seeing in the economy. And Bernie Sanders. Doesnt look too bad, but then you look at income inequality, and thats playing out there. Tom theres 60 years on economic growth. Francine investors will be looking carefully for signs on the health of the worlds biggest economy. Our guest for the hour is from u. B. S. , drew mat is. Great to have you on the program. When you look at u. S. Jobs, you need to make sure that people understand that these need to be growth followed off by wages, so strong, robust numbers. What do you think . Drew were expecting gains at twice the rate you need to gain in order to keep the employment rate stable, so very healthy number there. We had a really good number last month, expect it to slowdown a little bit, but the year over year number is going stay good. Rising quits and high levels of job openings are telling us that wages will pick up in the near term. Francine tom, does this automatically say that janet yealen will do something . Weve seen the world almost melt down, lot of stocks in turmoil, so she needs to balance the reality. Tom reality is buttressing up against the whatever is at the moment. I dont think anybody can figure out the theory. But the answer is, as you have in your research note, i love what you say about the three canaries. Theyre healthy. Theyre singing, theyre breathing. We dont do our squares on friday or linear regression. We dont do rather, drew matus does it in his research note, and youve got this huge link annal of tight labor markets to rising wages. Are we finally there . Drew i think we are. It took a long while to get there, but i think we finally reached the point where theres that momentum. As my Research Points out, you dont need to do it. In fact, economists, were too up in arms about the next mathematical model we can use. The problem is we use too many mathematical models and half the research cant be replicated. You need to focus on what simple things are better. Francine lets say we have higher wage growth today. How many rate increases, if at all, are you expecting from chair yellen . Drew were expecting the fed to take the cowards way out the first half of the year saying too much voluntarily at this timity around the world. Even if the data is pointing to a need for rate hikes, were going to take a pass, and we expect them to go second half of the year, so we end the year 50 basis points above where we are today. Tom i want to digress to your april note, like zero rates are bad for the u. S. Economy. Are negative rates bad for the Global Economy . Drew i cant speak to the globe. Every country is different. The way i tend to think of negative rates is some sort of tariff. Everyone is trying to go negative to affect their currency. In the u. S. In particular, where my expertise is theoretically, it just doesnt feel like it would work. If you think about quantitative easing, its buying something to add money to the banking system, banks paying on deposits to the fed would actually be taking money out of the banking system, so just from the simple money supply standpoint it would be counterproductive. Francine youre talking about rates in the u. S. , but is there an immediate effect for japan and europe . Drew well, there can be to the extent that it actually feeds through to the currency markets. Francine and banks. Drew but more to the currency story i think, because what they all are or seem to be is an attempt to make sure that relative competitive to your other trading partners. To the extent u more of an expo sure in exports, you know, they could potentially be helpful. There are some other avenues that make it helpful, but its really country by country specific. Tom i spoke with david westin at length after our shows were done yesterday, and he showed me a great chart of his plooming credit growth in america. Were not back to where we were in 2006, 2005, right . Drew no, you dont want to be, that was part of the problem. Tom thats what he says, you dont want to be. Drew we have nice, steady, modestly rising, but continually accelerating core bank loan growth. So mortgage lending, consumer lending, kind of the real economy as opposed to lending so people can go out and buy more financial assets. Francine very quickly, if we do have the next cries in the next couple of years, is it a 5050 probability . Will the fed will enough ammunition to counter that . Drew its nowhere close to a 5050 probability. For recession risk, our credit team does great work with credit metrics, and theyre suggesting 20 . I think thats probably about right. Not much above normal. The fed has the ammunition they need. They can do more quantitative easing. They can do more lending. They can certainly stabilize the system if it needs to be stabilized. Tom drew matus getting us started today. Wf a terrific lineup, beginning with mr. Matus. In our next hour, michael darda, and were thrilled to bring in the entire hour Robert Gordon of northwestern university. His caution on the future for the nation. Then we move to alan kruger of princeton university, the former chairman of the president s council of economic advisors. And bill gross will join us after the jobs report. Stay with us throughout the morning on americas economy on our job economy. This is bloomberg surveillance. Francine near new york, lets get straight to the Bloomberg Business flash. Thanks, francine. The richest man in china is creating the Worlds Largest chain of movie theaters. A. N. C. Entertainment has agreed to buy the cinema for 1. 1 billion in cash. A. N. C. Is controlled by the wonder group. The deal would combine the second and fourth largest movie chains in the u. S. Technology are preparing to sign their 6 billion takeover agreement, according to people familiar with the matter. Sharps need for Financial Support set off a takeover battle between fox con and Innovation Network of japan. And job cuts are on the way at two of wall streets biggest Investment Banks. According to people familiar with the matter, Goldman Sachs will cut more than 5 of traders and sales people in its fixed income business. Thats a bigger cut than the normal nearly firings of low performers. Meanwhile, bank of america will dismiss about 150 trading and Investment Bank employees next week. And thats your Bloomberg Business flash. Francine thank you so much. China intervened to support its stock market today ahead of saturdays National Peoples congress. Bloombergs heidi long is in beijing. Here in new york, we have the editor for global economics. Heidi, lets kick it off with you. Of course weve heard from chinese officials that theyre wanting to stabilize the market. Are we expecting more as the congress convenes . Heidi francine, its interesting, these are moves to the up side and are not uncommon at these major events. We saw that before the big military parade last year, and certainly that happened today. I think we can be expecting some policy announcements in terms of china stemming confidence into the market. We had some reports earlier on that theyre considering a massive overhaul of the regulatory bodies in terms of combining the banking assurance and security regulators, even with the p. P. O. We know that that is one element that needs to be contributing to the to i guess mismanagement of the stock market. Thats something to look out for. But i think in terms of managing confidence in the market, well probably be looking more towards rhetoric that comes out with the u. N. In terms of how theyre trying to really temper the appreciation and expectations guide the yuan to staples in the markets. Francine and youre absolutely right. This meeting will really be scrutinized by investors and markets worldwide, to really try to understand what the Government Strategy is. Are competent expecting them to say anything different, which is were not devaluing the uan . Haidi in terms of currency, absolutely not. We know what theyve been saying, dont expect this is the ability when it comes to the u. N. In so far that they can control what Market Forces are doing. We should expect them to go about the basket of currencies, because beijing policy makers, they dont want the situation every time the yuan weakens, which is seen over the past few months. Theyve been talking up this basket of currencies as a new point of reference to give themselves more flexibility, a little bit of a buffer space in terms of how the yuan moved. It will be interesting to see w far they go in terms of francine all right. Haidi with a little bit of insight of what we can actually expect from the National Peoples congress. You head all of our government and economics coverage. 3,000 strong National Peoples congress. A lot of information stays within closed doors. What are we expecting to understand . Were still trying to figure out what the real policy for authority in china is and what they want it to be like. Tom it runs for about 10 days, but for investors, there are really only two sessions that matter, possibly three, premier league presents a budget tomorrow. What is the growth target . How do they get there . Is it stable . S it credible . They definitely came back with a bang in the public arena, has a press conference a week from today, and then premier league will give the Closing Press conference. Tom do we know their budget . I mean, how do i know what the Chinese Military budget is . Do i even have a clue . Daniel i dont know that well find that out, various growth commissions have flags that there will be an increase in the overall budget deficit this year. Francine what is the one thing we dont understand or that we misread about china . Theyre trying their best, and it seems that markets get nervous about this regulation, but we need to give them maybe a little bit more time to sort it out. Daniel one thing people would like to hear is what does stable mean . What does no devaluation mean . Does that mean no movement . Were talking about the yuan. Ask that mean no movement whatsoever . Does it mean guiding things slowly down rather than the abrupt east . What do those code words mean . Well have to navigate through the language. The other thing i really mention is premier logues press conference at the close. By historical standards, premier leagues press conferences at the close helped to be quite freewheeling, even foreigners can ask questions. Tom thank you so much. This morning on china, well look to the scombeeked see much more in the china monday morning, look for that from Bloomberg Television in the early morning. On bloomberg go later today, theyll synthesize what we see across jobs day in america and across the news flow. It is jobs day. Were with drew matus, this is bloomberg surveillance. Francine breaking news from one of the biggest newspapers in brazil. We understand that cars from federal police are outside a building in the former brazilian president , one of the most popular politicians in brazil. Now, we dont know what the target of the operation is. Police officers, according to this newspaper, do not know what it is related to, but theyre also searching a house of lulas son. This is significant, because it comes 24 hours after brazils attorney general also denied allegations that the current president tried to interfere with corruption probes. Tom i want to mack a joke, but the answer is this is not funny. Francine especially as investors. You need to figure out whether at some point they clear out. Were not commenting on this particular case until we find out more, but there is wide spread corruption from the corporate, so this matters to investors. Tom well, it does. Can you imagine a headline, texas Police Outside george bushs house . I mean, thats amazing. Francine yeah. I mean, this goes back to some of the republican debate, right . Tom there was a debate, right . Francine what is it, reality tv . Tom youre flying back to the United Kingdom youre so appalled. Francine no, im staying here for entertainment value. These rules of political gravity do not apply to him, from insulting senator john mccain for getting captured in vietnam to questioning the question about ku klux klan, trumps 2016 campaign has been an extended gaffe. Why do we have donald trump . Tom we have donald trump because of a chart were going to show later in our show today, which is declining household income. Drew, i know youre not going to play the political game with us, but whether its trump or sanders, its about a disaffected america. Will they become less disaffected with your optimism . Drew i dont think so. My own personal view on it is theres the income inequal story, but more importantly, people think the game is rigged. Thats the prevailing thing on both sides of the aisle. Francine the politician side in drew if youre on the left, you think that bankers and everyone are rigging the game. If youre on the right, you think the government is rigging the game. Everyone thinks the game is rigged. No one thinks its fair. Tom is that the same in the United Kingdom . Francine as an outsider, what i dont understand is what donald trump represents. In the United Kingdom, youre having income inequality debate, which is why tom that is as far west as youve ever gone in america. Francine thats not true, because i lived here for 10 years, but move on. Drew, what is it that can change the game . Its not income inequality, its a huge political drew over a gradual period of time, it will be people feeling theres an opportunity. It will be all the things that traditionally have led the u. S. Forward. And usually that comes down to jobs and a prolonged period of job growth, accompanied by wage deprothe, which is why we keep everything comes back to wages. Tom as jeff immelt once said, theres nothing that sells problems like 3. 2 real g. D. P. Its amazing, its just amazing how problems go. Drew matus getting us started on the American Labor economy. Well dive into that in our next halfhour. In our next hour, a special hour on this jobs day. Michael darda with m. J. M. Partners joining us with robert for done of northwestern and his Controversial Book on americas economic fall. Tom it is the first friday of march, jobs day. Weve got a wonderful lineup all through the morning on bloomberg surveillance. Drew matus with us. We go to bill depross after the jobs report. Youll see that worldwide. Right now we gonks, tom. Chinas defense buildup is about to slow down the pace of the countrys military spending growth will decrease to between 7 and this year. Thats the smallest since 2010. The estimate was released before tomorrows start of the National Peoples congress. The economy wont get going again until the Prime Minister punches his cabinet. The head says most greek ministers should be replaced by people with Technical Knowledge and the ability to carry out reform. Apple is getting bigname allies in its fight over that court order to unlock a dead terrorist iphone. 15 companies have filed a socalled friend of the brief Court Backing apple, among them microsoft, good and he will facebook. The companies reject the governments argument the law allows it to force engineers to undermine a Product Security feature. The investigation into Hillary Clintons email while secretary of state is entering a new phase. The f. B. I. Plans to interview clintons former aides in the coming weeks, according to people familiar with the matter. Investigators are trying to find out if clintons use of a private email server compromised classified information. And canadas Prime Minister says it would be nice if americans paid more attention to the rest of the world. The comments were made to the cbs program 60 minutes when he was asked what canadians dont like about the u. S. He goes to washington next week to meet with president obama. Global news 24 hours a day, powered by our 2,400 journalists in more than 150 news bureaus around the world. Francine . Francine thank you so much. Now lets get more on a little bit of the political upheaval were seeing in europe, where potentially its seen as one of several weeks, the brexit, and, of course, the general strength or not of the economy, part of investors concerns. Were joined by the pimco managing director in london. Mike, great to have you on the show. The risks to the eurozone are increasing almost by the day. How do you position yourself on that . Mike yes, they are, and i think the challenge youve got is that theyre a bit dispirit, frankly. I mean, on the one hand, youve got a weak Growth Profile and some uncertainty, and you got something that keeps the e. C. B. In play, and well see what policies come up next week. Brexit will be with us for a while. I think it will probably put further downward pressure on bond yields, so yes, for now, it looks like europe is in the low yield environment and will be here for some time to come. Francine i picked something out of the Financial Times this morning, the former e. C. B. , now chairman of societe generale, says the fact that Monetary Policy is the only game in town is problematic, but as Central Banks stop playing their parts, the sound of silence could become deafening. How do you rate the possibility of a recessionary environment globally . Mike we dont see a global recession. The main reason we dont is we would agree that Monetary Policy unfortunately is the only game in town at the moment, but, you know, Interest Rates are low across the western world, and that is supporting Consumer Spending. For a while, the growth we see in the u. K. Has all been predicated on domestic consumption. We dont see any reason why that should change. As long as those consumers hold in, we think that should be enough to hold up growth at tolerable levels, so we dont really buy into the global recession. Clearly the biggest risk out there is china and how they deal with their devaluation is the biggest risk. For us we dont see a big one of tee valuation, we think it would be a slow drip. Tom lets do it would things here. Mike amey has a brilliant chart ill get to. This is the german twoyear yield. Weve gone through the show and not mentioned we had a record 5. 086. Oday at negative this is unrelenting. The german twoyear versus the u. S. Twoyear is negative. That dove tails spew the fabulous pimco observation on the f. X. Factor. When you look at dollarbased world growth, youre almost to a negative statistic. How important is the dollar to your investment mix . Mike the dollar is crucial. The dollar were to appreciate rapidly, then clearly that does create some challenges. It puts pressure on the chinese obviously, and that i think is probably the biggest risk, and clearly would call into question any kind of fed rate cycle. So i think the dollar, the dollar has been one of the key challenges for the fed, really, and the chinese. I think its something we should all keep a close eye on, yeah. Tom drew matus, what does the u. B. S. Call on Dollar Strength this year . Drew well, its going to be relatively stable versus the euro, and it doesnt really matter whats going on central bankwise, because everything is kind of priced in as far as we can tell, give or take within limits. The question i have for mike can i bring mike back in . Id love to know what pimcos thoughts are in terms of negative rates and whether theyre harmful or helpful. Tom mike, do you own negative rate paper . Mike sadly, we do, yes. And the reason is, and part of the reason why the german bunds is theyre forced to own coral indications to places like short european bonds. We dont like it, but particularly people like insurance clients are forced to. Thats why were down here. So, yes, its sadly, we do. Tom ive never asked this question. I dont mean to be rude, but i want to know what youre doing this weekend. Are you paying a pay cut as a Portfolio Manager because you have to pay money to the German Government to hold their paper . Mike de facto, i am taking a pay cut, because im spending sunday on an airplane out to Newport Beach for first thing monday morning. So i guess i am an example of somebody taking a pay cut in that world. Outside of that, no, im not. Francine nicely answered. 10 for mike. When you look at brexit, what polls do you look senate how do you prepare yourself . Do you forget about it until it happens, or what do you tell investors . Drew were on record saying mike were on record saying it could be up to 40 on brexit, which weve had for a while. The trouble with the polls is, weve seen this before, that given pretty good guidance in the past. So if you were to see all the polls move in one direction, then clearly that is a useful piece of information. At the moment, theres an awful lot of noise, and quite a lot of uncertainty. Francine will the brexit risks only play out in currency . Mike at the moment its mainly in currency. If you see, broadly speaking, sterling is down about 7 on a trade weighted similar against the dollar. So far, the currency has been the primary route by which people have played brexit. Our sense is there are if brexit becomes more likely, that ironically is bullish, simply because it pushes out any kind of rate cycle even further and potentially brings rate hikes on board. Tom what is your view, mike, of the American Economy . Drew matus of u. B. S. With us has a starkly optimistic view of the resiliency of our economy. Do you agree with that . Mike thats probably not a word we would use. I think we think that the u. S. Growth will hold, broadly speaking, or slightly above trend, largely based upon the consumer. Lets not forget that consumers, they look at the stock market, they look at the Housing Market, and the Housing Market is still doing very well. Our expectations are mid single house operate growth, and that really is where we think that Consumer Spending can be underpinned. The jobs report, well see what it comes out with, but so far employment growth has been pretty strong, so consumers should be ok. Tom safe travels to Newport Beach this weekend. He is with pimco in europe. Drew matus with us. He is with u. B. S. When i hear starkly optimistic, i would suggest pushing against the gloom out there. How big is the gloom . Drew pretty big. Number one question i get is where in the Economic Cycle are we . Whats the probability of recession . Tom i dont hear a single interview saying recession is on the horizon, even the gloom proof we have suggests theres no. A little itigroup bit. Drew look at the consumption numbers, jobs numbers, the wage bill going to the u. S. Consumers am its all really good. Francine inflation is going nowhere. True well, inflation has been ticking up. Core inflation is above two on a c. P. I. Basis. And on p. C. Its close enough to two, where if you average the two, youre close to two. I use the word two about 100 times there, but francine its crucial. Drew two is crucial, but its significant in the fact that everyone says theres no inflation, yet the data tells us there is. Tom how much in service, three, even higher . Drew yeah, somewhere around there. Tom drew matus with us. He and his colleague out front on rising inflation three and six months ago. It is jobs day. We begin with drew matus. Later, alan kruger of princeton university, a former chairman of the president s council of economic advisors. And then well speak with bill gross about the jobs report. Bill gross on our financial repression. Stay with us. Francine goodbye, new york. Its my last day in new york, but theres a little bit of snow, so maybe im stuck here with tom keene a couple more days. Lets look at some of the movers this morning. Commodity stocks back in the green, posting the best performance of the 19 Industry Groups on the stoxx 600. Drew, when you look at commodities, and we talk about inflation, everything is correlated. Everything is correlated much more than it was even 12 months ago. Is this because were trying to figure out inflation so everything relates back to oil, or is it because investors are nervous and this is symptom mack of the turmoil were seeing . Drew i think its more investors are nervous. If you would have asked me 12 months ago if oil prices did what they did, what i think would have happened, i would have told you u. S. Consumer spending would have jumped through the roof, everything would be great. There would have been a pullback in the u. S. Energy story, but it wouldnt have been that significant as it has been. I think people have people have adapted probably much more quickly, maybe too quickly, to this view of how the world works. And, you know, i think what theyre missing is the followup. Francine is that the benchmark from china . Drew Energy Prices falling, good for the consumers, Energy Prices falling is bad for the u. S. Economy, without any sort of nuance in between. So its very much binear models, and everyone has binear models. And when youre using binear models like that, you end one higher degrees of correlation. Tom a little longer term perspective, lets go over to my chart of the year, and this works with drew matus and professor gordon in the next hour. This is the longterm eisenhower and john f. Kennedy of our commodity deflation, priceadjusted commodities with a boom in the 1970s. This is a lot of inflation. Down we go, drew matus, and we roll over here. The longterm benefit of this to any economy has to happen. When does it happen for america . Drew well, it happens once we wash out the investment story that were going to have. Tom just clear the Balance Sheets and we move on. Drew its pretty much the first half of this year, should be the end of the cap ex weakness related to energy, simply because were running out of money we spend for energy. Tom in the chart of the week, it wasnt from true matus, it was from renaissance macro, which showed how, if you look at the layoff numbers, as you mentioned, theres energy, its terrible. Everything else is pretty darn good. Drew the fact that claims are sitting where theyre at and we know there are layoffs in the Energy Sector is stunning. Its just stunning. If anything, layoffs might be too low, so tom why do you say that . Come on. Its american. Drew theres not enough turn. Whats american is turn. Tom look at your hands. Francine ok, lets go back, when we talk about overcapacity in the oil sector, you still have iran coming on, so i understand thats probably the biggest risk to oil prices right now is not only tankers, but stockpiles. But we still have russia pumping at a record. Saudi is not cutting back. Iran is coming on. Drew yes, from a pricing perspective globally, that also puts downward pressure prices. At the same time, you have u. S. Investment in the sector pulling back. What i try to remind people is the u. S. Story is the longer term story. It is a subset of the economy that can basically i mean, its not a faucet. You cant turn it on and off t. Probably puts a coop prices we didnt have before, and thats a net positive for the entire free world. You have an Energy Producer thats a large economy, and were willing to i mean, we probably will be willing to export at some point. And thats a net benefit to the globe, that were going to be a swing oil producer. Thats good for everybody. Tom the hallmark of research is you put algebra behind your work. Youve got beautiful regressions and correlations filtered throughout all your research. Stan fisher talks about uncertainty. I would suggest respectfully its a little different than what alan he talks about uncertainty. How do you guys codify the word uncertainty at the back end of that regression equation . Drew so i would just say that i dont view uncertainty as a bad thing. One of the problems is the fed is trying to remove volatility from the equation and remove uncertainty, but what are markets . Theyre efforts to reduce uncertainty through people having different opinions, putting different prices on things, and it settles. If everyone has the same opinion and Something Else happens, then you actually increase volatility. So it actually works against you. There was a very good paper on this at the Chicago Schools Monetary Policy forum last week. Tom excuse me, everyone went to this forum except me. Did you go, francine . Francine i did. Everyone. Everyone. Tom everyone went, thank you. Drew its the greatest gathering of nerds. Tom i was not invited. Thank you. Francine all right. Should we go back . Tom i need a bloody mary i didnt go to the booth conference. Michael mckee did. Coming up on bloomberg surveillance, radio, this is important. After the jobs report, well try to synthesize what weve seen this week and look forward to russ, their global chief investment strategist. Drew matus with us, bloomberg surveillance. Francine here in new york, lets get straight to the Bloomberg Business flash. Thanks, francine. Yahoo is now considering a new plan to salvage i was, according to people familiar with the matter. The company may bundle its japan stake with its web operation and sell them off. I cant noo japan is the countrys most profitable website. The newly formed hewlettpackard enterprise forecast profit in the Current Quarter that may exceed estimates. Meg whitman reported better than expected earnings for the last quarter. They target corporate customers with hightech gear. And in zimbabwe, the president Robert Mugabe has cost the company more than 13 billion in diamond smuggling. Hes created a company thats taken over the diamond mines. Mining is the countrys largest foreign exchange. Thats your Bloomberg Business flash. Francine thank you so much. We were talking before about the fact that you think a degree of volatility is healthy, because it prepares you for the eventuality of a possible shock. If you look at gold prices, there it is tom inflation is just back a million years. Heres the bounce. Francine this is probably the chart of the year. This shows risk like no other. Is that fair . Does this show us that markets are prepared for the next shock . Drew i dont think were prepared for the next shock, but it does show us that people are more concerned about it, thinking about it. One of the things i always like to look at is the ratio of gold to the s p 500, some measure of Central Bank Credibility. And, you know, if you think of gold as another currency, then you can understand kind of if gold is going up and the s p is going down, it suggests the Central Bank Credibility is falling, whereas if the alternative is true, gold is going down and s p is rising, that usually that would suggest to me increasing Central Bank Credibility. Francine if we go a little bit further, the fed should not worry about market turmoil, because you believe its healthy, better prepared for what comes next. Drew yes. You get into a feedback loop. The fed talks about financial conditions, but the fed sets the initial metric for financial conditions. So, you know, if you dont want financial conditions to tighten, then you dont tighten, and then you never tighten and then you create problems. Tom you read my mind. Cheryl king moments ago, emptying off drew matus, says feedback loops from Financial Markets to the real economy could result no credit crunch. This is an opposing view to what you feel the Group Suggests recession, not likely, but the idea of a Global Economy falling in much more like what we see at citigroup. Lets look at the chart right now, and this is the great conundrum. Well, we dont feel good. Thats a fact. Heres the Unemployment Rate back to Robert Gordonlike 1947. Theres the miracle of our generation, the red line down, better, good america, up we go. Drew, weve come back to where we are and beneath the longterm unemployment average, and yet so much of us feel miserable. Why is that . Drew its even better than that chart suggests. Because if you strip out people who have been out of work for more than six months, that number is very, very, very low. The reason you would do that is because those are the people who are going to have to go back and get retrained. So the labor capacity in the u. S. Is very tight. Theres not a lot of spare labor. Tom which means wages go up. Drew which should mean wages go up. Thats the missing link. When wages begin to accelerate on a sustained basis, you will see confidence return on orders of magnitude. Its already driving the jobs market is driving the Housing Market. It is driving auto sales. Its driving the overall economy forward. Francine do people read here in the states . Theres a correlation in the u. K. Between how Much Negative news and were just hearing from the chinese premier saying theyre going to face bigger difficulty this year, they need to promote more structural reforms. In the u. K. , when we get headlines that are negative, people feel less good about the future. Is it the same in the u. S. . Tom its the same, but we have spring training. The difference is the baseball season starting, so we feel better. To your point, yeah, we do, and that keeps the political debate going. Drew when the central bank tells you rates have to be at zero and the world is falling apart, then people get upset. Tom where should they be . Francine demanded good mexican food before she exited back to europe, and at lunch yesterday, the debate is, ok, where are we supposed to be . Wheres the fed supposed to be . Drew so if i was running the fed, and its always a dangerous thing, but since you asked, ill tell you, i think nominal fed funds at 1 percent would be the right level exactly at this point. Tom very good. Drew matus, thank you for getting us prepared for five hours of bloomberg surveillance this morning, as we go to jobs day. We will continue. Michael darda joins us, and we are thrilled to bring you, for the entire hour, Robert Gordon. He is our labor economist. Robert gordon on our economic history, the rise and the fall of American Economic growth. That is next. Tom it is jobs day. The Unemployment Rate this sends. . Hy is america still so anxious the rise and fall of American Economic growth. Ert gordon of northwestern the golden age is over. Well before michigan, romney speaks, and rubio and trump embarrassed their ground old party. This is bloomberg surveillance. It is jobs day, friday, march 4. I am tom keene. With me, Francine Lacqua. With Robert Gordon, you begin the our strong. Francine we are also hearing from the chinese premier. Iss is huge, because he giving an interview to Chinese National radio, saying they need effective investment and consumption in 2016. Massaged the message through the weekend, right . We will have that on our news flow. First word news, here is nejra cehic in london. Nejra donald trump was on the defensive during last nights president ial debate. Mitt romney called the front. Unner a phony and a fraud here is marco rubio. Marco rubio two thirds have votedple against you. They do not want you to be our nominee. The reason why is we are not going to turn over the conservative movement, the party of lincoln and reagan, to someone whos principles are not conservative. Cruz, john kasich, ted and marco rubio said that if donald trump wins the nomination, they will vote for him. A pro has resulted in dozens of politicians and leaders going to jail. The u. N. Says it is close to a deal with syria on humanitarian aid. Wants tonational body deliver medical supplies to areas powered by rebel forces, but the Syrian Regime has made it difficult. The shaky ceasefire is Still Holding the most a week after it went into effect. North Korean Leader kim jongun has ordered his forces to be ready to launch Nuclear Warheads at any moment. That came after the country testfired what it called short range reject files. Global news 24 hours a day, powered by 2400 journalists in more than 150 news bureaus around the world, im nejra cehic. Tom . Tom lets get to our data quickly this morning. On jobs day, not much going on. To an twoyear yield, down record low. Crude oil still elevated after a good number of days for commodities. To the second screen, please. Showing a better stock market over the last 20 days. Francine, that is a stunning number. Emerging francine emerging markets, stocks i want to spend two seconds on china. We are also hearing this is unusual the premier and the president talking on National Media in china saying they are facing difficult challenges, the president saying they should open more sectors to privatization. To this tension between turkey and greece as it is going to be an interesting week. Lets get your reading. Some of it is perspective. Have wonderful charts this hour with Robert Gordon. Here is nominal gdp back to world war ii. Out we go with a good set of numbers, and then we boom with inflation, the real economy, into the volcker years. This is a great moderation. Then we come to a lower level of real gdp, and this slope is part of it. Look at eurozone, you look at the chart, and they are probably jealous. You have income inequality leading to political of people. Tom on this jobs day, michael darda is with us from and km from mkm partners. He comes in with Robert Gordon of with western university. Professor gordons parents were measure,e in how to account for the American Economy. When you hit the phrase expectations augmented phillips curve, blame gordon. He came up with it years ago. We are so thrilled to have you here. Robert we are glad to be here. Tom how is jobs day . Robert we are continuing to see the labor market become more and more healthy as unemployment goes below 5 . We are getting back to the levels we were at in 2006 and 2007. It is not impossible we could go back to 4 unemployment this time because inflation is so moderate. O we are on a process i think in 2016 and 2017, of picking up the last pieces of slack in the labor market. After that, i think the fed is going to have to tighten because , in my view about inflation, we are headed above 2 if we go further than we have. Tom i want to come to your defense. All saysummers, they the same thing. They say this book is mustread. You say it is not about the gloom now, it is about how things were so good in the decades back. This has been the hallmark, michael darda, of your work. The resilience in the American Economy. Push against the mischaracterization against gordons book. Michael if you look at the recent data, it makes his case, in that productivity has only few pointsnding by a per year. Growth potential has seems to have tapered off to radically. If the fed is a 2 inflation that only gets you about 3 topline growth. That is about as good as it is going to get unless something changes on the supply side. Francine i have been in the states for a week and watched a lot of your president ial debates. I have lived through super tuesday and still lived to tell the tale. How do you square off employment figures that are quite good and voter angst . Robert we have had productivity growth of only 3. 5 per year for the last five years, the lowest in American History if you exclude the great depression. So what has happened is we have been creating jobs 13 million jobs since the end of the recession but at the same has, that robust growth gone with slow productivity growth. Francine that is technology, isnt it . Robert wages come from productivity growth, so it is the underlying weakness of productivity that accounts for the slow growth in wages. From that comes voter angst, that they are not making progress. Tom what is so important here is that professor gordon has always had the courage to look at the complexity of the American Economy. H over e implies be n. R l, implies i over you have been so good at this. The simplicity of which we look at a chart like this and our much better recent Unemployment Rate highs the complexity underneath. At, professor,k underneath a significant number like the underneath the significant underneath the simplistic number like the unemployed mayor gray . Michael we are getting into the kind of territory from to that robert we are getting into the kind of territory from 1996 1997. We are bringing back the the longterm unemployed is evaporating rapidly. People are getting back in the labor force after having dropped out over the last two years. Our problem is not unemployment, our problem is productivity growth. If you want some ideas as to why it has been so slow over the past five years, what happened is we have had a digital revolution that utterly changed the way business works in the office. Starting in the can 70 starting in 1970, with file cabinets, calculators, we went through the invention of the personal computer more than 30 years ago and had a complete turnover in the way business operated, most of which happened even before the internet. Francine you are talking about the productivity puzzle we are also seeing in the u. K. How do you measure it . When we go back up, are we stopped because of this technological resolution because of this technological revolution . Michael we should lower our expectations. Even with policy, if we design policies, that were optimal to boost the supply side and productivity, maybe we could raise it a few tenths of a percentage point. But we should not be holding out hope for a dramatic reversal. The Democratic Peace the demographic piece is also important. That means Growth Potential is going to be lower, in addition to the weakness in productivity. Tom i want to come back to the innovation idea. This is critical, short answers, please, because of time. Are we drowning and becoming euro . Are we becoming euro sclerosis . Are we becoming the United States of europe . Robert absolutely not. We have the most dynamic innovation machine in the world. We have Venture Capital that is eager to fund new ideas. In my view, the new ideas do not have the impact on productivity that they used to. , quickly . El excuse me, michael. Shut up. Francine . Michael the democratic the demographic profile is better here. Tom it does not get better than that. With us, Robert Gordon of northwestern university, and michael darda. Later this morning, on the American Labor economy, a colleague in crime of professor gordon, alan krueger of princeton university, the former chairman on the president ial council of economic advisers. And phil gross of Janus Capital. Stay with us. Francine we are looking at markets, data, u. S. Jobs, and chinese intervention as parliament meets. Lets get the Bloomberg Business flash from nejra cehic. Nejra the richest man in china is creating the largest chain of the theaters. Amc entertainment has agreed to carmike cinemas. Job cuts are on the way at two of wall streets biggest Investment Banks, according to people familiar with the matter. Goldman sachs will cut more than 5 to traders and sales people in a fixed income business. That is the biggest cut to the number. Early supports intervened to stock market as they before the annual Peoples Congress opened. Helped thed funds shanghai index to its best weekly gain of the year career at is your Bloomberg Business flash. Francine . Francine we have heard, of course, from the National Radio china. They are speaking to the premier , but also the president or the premiers saying that the economy in china, they need to accelerate reform. Lets get straight to Bloomberg Economics executive editor dan, when you try to figure out what the authorities want to do what growth figures will be, what are we expecting . Is this people trying to hold onto their jobs, or are we going to get targets . Dan we are going to get growth. The premier is going to lay out a growth target tomorrow, and there will be a lot of comments about how they are going to do it. How are they going to put a floor under the economy and stop it from falling below a growth rate of 6 . People are expecting targeted fiscal stimulus. Bang we saw inig 2008, but just to keep things ticking over. Francine are we concerned they growth below that 6 target . Dan they do not want to go too far below that . This relates to turmoil in the markets and how the fed, what the fed wants to do next. Michael there are serious challenges in china. A big runup in leverage, in fromands 2008, mainly 2009 22011. Regime,xchange rate with the dollar rally and fed expectations tightening, it caused a fairly sharp tightening of monetary position, so nominal gdp growth is slowing sharply. At some point, i think they will have to address the Exchange Rate regime and back away from this cause i currency peg that is simply outliving its usefulness. Premier leads an address tomorrow, a press conference a week from today, and then the premiers Closing Press conference on march 16. Tom thank you so much. Stay tuned to the worldwide coverage of bloomberg sunday into the asia morning, on what we will see out of china. Later today, this jobs day, us,r bill gross joins we will try to synthesize to get you to the weekend. From new york, france him the choir and tom keene, this is bloomberg surveillance. Tom good morning, everyone. Jobs day. It is bloomberg surveillance. We go beneath the headline did it with michael darda of mkm advisers. And we are thrilled to bring you michael mckees book of the year. He has been the only one who has read, cover to cover we are thrilled to have you here. Michael it is an enormous a compliment. It is important that we under stand where we have come from. People do not realize and you lay out the case well the enormous changes from history before, from about 1880 on. I would point this out to fran and tom or if we went down to wall street in 1880, you would have been maneuvering around piles of manure because everybody rode horses. That is the kind of change we have seen in Society Since then. We talked a lot about how much money we make and how standards of living have risen in terms of bank accounts. But it is how we work and the effort you put into it. Tom he captures beautifully the sprawl of this. Is the idea today that the 1950s and the 1960s was a oneoff. We got lucky after world war ii that was with a boom that was pleasantville, and a oneoff fiction. Do you ascribe to that . Robert no. We had a tremendous range of innovation in the 19th century that took time to figure out how to use the internal combustion engine, how to use energy. The economy really took off in the 1920s. Despite the great depression, productivity soared after world war ii. We figured out how to produce at a more intense, higher rate. Thanks to the Government Spending a lot of money and running a huge deficit, we replaced thetely nations stock of Machine Tools and 1945. 41 we came out of world war ii a much more productive economy than we had been in the 1920s. Francine i was reading a fact of the year yesterday, and the whole of production in china, last year, which fell 5 , was equal to half of all cement production in the u. S. In the 20th century. Robert china has been producing too much cement, or they will have to redact. Chinane too much, or is dwarfing the u. S. . Robert china is still only down to 15 , so anything i say about slow u. S. Growth does not apply to china, which is still in the process of catching up. Even further behind is india. Want youael mckee, i to jump in here. This goes back to the observation of george eastwood, 1989, on film. To me, that is the inside of the book. Robert the other point michael the other point that critics make is that you are too pessimistic because we have so much potential out there with the computer revolution. You acknowledge there have been. Hanges there in the 1970s why dont we have a great future ahead of us . This entrepreneurial machine, the thing kind of future we achieved in the past . Robert in the first place, i think we will have productivity growth. It will be about 1. 2 . If we compare that with the whole 45 years since 1970, it will not be that different. Where we are looking for innovation is in robots, artificial intelligence, 3d printing, driverless cars. Each of those things are on the horizon, but it is amazing how slowly those innovations are occurring. Tom michael darda, will they employ people . Andael porter of harvard Robert Gordon of northwestern see, that world will they employ people . Michael unemployment tends to fall. When we see periods of rising unemployment, almost in every episode in the u. S. It has been a result of a demandside shot, not a supplyside shock. Fabulous program at gordon with us on this jobs day. The rise and fall of american growth. Michael mckee, it is his book of the year. We have an hour for you on radio. Kruger and grossly this morning. Francine we are in new york. I am Francine Lacqua with tom keene. Lets go to nara changes. Lets go to nejra cehic. Chinas buildup is about to slow down. The estimate was released before tomorrows start of chinas National Peoples congress. It is one of the closest encounters ever reported between a commercial jet and a drone. Last month an Unmanned Aircraft came within five feet of an aircraft jet landing in paris. The pilot was able to take evasive action. Drones are banned from flying near airports. Apple is getting bigname allies over the court order to unlock the iphone. 15 companys are backing apple, among them microsoft, google, and facebook. The law allows it to force engineers to undermine security features. The fbi plans to interview Hillary Clintons former aides in the coming weeks, according to people familiar with the matter. Investigators are trying to find out if clintons use of a private email server compromised classified information. Once he leaves the white house, president obama plans to stay in washington for at least a couple of years. He told a group in milwaukee that he and his wife have not figured out where they want to live, but they will stay in washington for a while so their younger daughter can finish high school. Global news 24 hours a day, powered by 2400 journalists in more than 150 news bureaus im nejra world, cehic. Tom . Day it was a most historic in america yesterday, something i have never seen, nor any of you as well. We move from romney to rubio. Ted cruz may be in the middle. All going after mr. Trump third we can pick out one of eight videos. Here is mr. Rubio. ,arco rubio there is no doubt the numbers are there. Two thirds of the people who would cast a vote in a republican primary or caucus have voted against you. The reason why is because we are not going to turn over the conservative movement of the party of lincoln and reagan to someone whose positions are not conservative. Margaret joins us this morning. Pick up the pieces and get me to next tuesday. Does any of this matter for the michigan primary . it is really unclear what will matter for the michigan primary, for the next 10 contests, and then march 15, the one that really matters with florida and ohio. In ohio andr Kasich Marco Rubio from florida, it is kind of their last stand. Francine is donald trump unstoppable . Margaret no one is unstoppable until they are unstoppable. Every republican, even the ones who say they will reluctantly back him if he is the nominee, has said you are not the nominee until you get to the magic number. But it looks pretty difficult to stop him at this point. Francine so what happens to the Republican Party . Is it an implosion . Will we see people rally behind donald trump, or will it blow up . Margaret it is a hugely fracturing situation. There are a couple of cues that indicate that the rallying may be difficult. Romney,tionship to mitt and his absence of a Vice President ial running mate. Tom what does the establishment do for lunch today . What do they do . Margaret hope for the best. Tom what does mitt romney and the rest of them do after the pageantry of yesterday . Margaret it is a problem and they will continue to be in these handwringing situations. Are saying that he is unfit to be president but they will back him anyway. That is the quintessential problem of the establishment. Tom next time i am in washington thank you so much. We continue this discussion on our economic politics. Michael darda is with us with mkm partners. Professor gordon, i know you have never seen anything like this. This is not senator simon of illinois. This is chaos. How do we get here . On here and we have had a political divide growing between republicans and democrats that has helped to polarize the government, helped to prevent us from dealing with the problems that the United States has. I see it just getting worse. No matter who is the new president , unless we have a republican president with a strong republican congress, then they are going to be able to make revolutionary changes by the standards of the last not just eight years, but the last 20 years, with a democratic 2016, weresident in will see continued polarization. We are not making much progress politically. Recessionary the possibilities of this country increased if donald trump gets into the white house . Michael when you look back at 100 years of u. S. Business cycle , except every recession for 1945, was associated with a Monetary Policy shock. It is hard to see recessions that are the result of those. You do not address the weak productivity we are talking about with a lurch to massive trade protectionism, by exporting and uprooting 11 Million People from the labor force. Some of the proposals floating around both from the left and the right are quite concerning, to say the least. Francine you keep telling me that 2016 is different. I can see it, being here a week. Do we need to analyze productivity, what is going on with the labor market differently . Robert what we have got is a tendency by political candidates to claim unrealistic potential achievements for economic growth. We had jeb bush promising 4 growth. Sometimes we hear Bernie Sanders proposing 5 growth. Our economy will be lucky to sustain 2 growth. Tom do you agree with that . Michael unfortunately, i do. Tom i want to go back to 1860 and lincoln and the advent of the Republican Party in your chicago. That kind of spirit is gone, in your book, and what we have observed in the last two weeks in america. How do we get back to the spirit that you chronicle in the rise and fall of growth . Beert we could only transformed from a rural to an urban economy wants. We can only have central heating and airconditioning once, coming into an make us live in a uniform temperature. We could only achieve the speed 707 yearsnce with the ago. Francine if donald trump does get into the white house, will we have to rewrite American History, or would he toned down his rhetoric . Robert i think he will have to tone down his rhetoric. There is no way our economy can 11 millionhout the undocumented immigrants. I think it is a phony threat that he will deport them. We will have an unprecedented ,olitical revolution this fall with the mobilization of the voting power with hispanics to come out unanimously against trop. This is, of course, what the republican establishment is so afraid of. Tom we have seen huge turnout. With all due respect, mark halperin, john heilemann, will give you perspective on all of this today. And through the weekend. Bloomberg surveillance bloomberg will continue the conversation. Jason furman look for that. It is job stay with Robert Gordon and michael darda. Stay with us. Bloomberg surveillance. Francine you are looking at live pictures coming in from chancellor Angela Merkel talking there at the elysees palace. Angela merkel, six to seven months, being out front, and putting her political career on the line, saying we must do more to help the refugees. France oh Hollande Francois hollande saying the refugees must remain as close as possible to home, but he is trying to set up a fund for countries to host the refugees. This goes to the heart of the european union. How the u. K. Votes on grexit on brexit. It is the eurozone, a political agreement to keep peace in europe. So you can cross borders, and this is being put to the question. Tom you get this. A lot of us in america, including dumb me, do not get this or the greek islands, they get right next door to turkey. So when they go from turkey to greece, it is a hop, skip, and jump. I think it is over 10,000 people per week that show up on the island. Francine we have incredible pictures where you see hundreds or thousands of lifejackets abandoned on the beaches. Tom what is the goal to get to monday . Francine we need to try to find a solution, to make sure that we give a strong signal in europe that we can find a solution for this because this goes to the heart of the eurozone. Are you concerned that the eurozone will implode in 2016 . Think in 2016not we are looking at a eurozone implosion. Perspective,rterm obviously big challenges. I would say mario draghi, i think, is doing the right thing. His actions have been impressive. He is up against a lot of resistance, but he is being about as aggressive as one could imagine considering the restraints. There is at least slow growth, recession slow growth, unemployment is way too high, but it is coming down, and mario draghi is expected to do more easing this month. It is the right thing to do, but he is overshooting his targets. He does not have as many allies as he should. Tom some of our candidates want to build walls with canada, with mexico. What did you learn in studying immigration for your important book . Robert in addition to the problems with innovation, we have the slowing of hours per person as the baby boom retires. There is no better solution to our demographic problems than more immigration. Immigrants are young. The way we get more people into , to paying age groups the taxes to Fund Social Security and medicare, is by more immigration. Not throwing them out, but bringing them in. Tom can we be selective about which immigrants robert absolutely. Canada provides many role models for the United States. A points system you get points for education and work experience. If we had an immigration system like canada, we could bring in three times as many people, and they would be highquality people. At live we are looking pictures of Angela Merkel with Francois Hollande in paris. Is there a ratio, where it is easier to bring in more immigrants in any country . 20,000 immigrant today how many can we absorb . Robert we already taken one Million Immigrants per year. Orada takes in 200,000 300,000. We could easily double the immigrants coming into the United States, and it will be healthy for the economy. Tom you are going to tell jeff flake we could double the immigrants . Robert skilled people, talented people, young people. We are currently kicking out College Graduate students. Tom synthesize this over to nominal gdp. If we get Robert Gordons america, do we get back to the nominal gdp that was out animal spirit of another time . Michael unfortunately, probably not. There are some things that we could do to boost productive potential. If we are saddled with Slower Growth and potential and the fed has a 2 nominal gdp it is lower and it will likely continue being lower. Francine how should americans view china . They need to start spending more. Will they ever become the American Consumer . Michael that is certainly a long way off. The way im am viewing things, there are these challenges and policy shocks that are in the background. The nearterm challenge for china, i think, with the Exchange Rate, you have diverging Business Cycles, and china has been dragged into a passive tightening and monetary conditions, and a steep slowdown in growth. If you look at the big crash in Commodity Prices, that is at the center of it. It is a shorterterm consideration but important for investors. Investor, doas an you trust the chinese authorities . Intervening in the stock market does not make a lot of sense. Intervening on one hand and taking the money back out with support inand to Exchange Rate at an artificially high level does not make sense. These are not confidenceinspiring policies. Tom we will come back on this job stay and look at the great mystery that is the nation possibly efficiency and productivity. Robert gordon and michael darda with us. We continue the conversation with alan krueger of princeton university, his landmark work on the nations inequality. And bill gross will join us as well, from Janus Capital. That will be on tv, radio, and serious xm channel and serious xm channel 119. Tom before jobs day, quiet. 111. Nd turning off weaker in the last couple of days. Notcine says she was returning to london unless we were over 1. 40. Renminbi, 6. 51. Important meetings over the weekend in china. Look for that news sunday evening across all of bloomberg. Francine coming up shortly, it with davidrg westin, jonathan ferro, and stephanie ruhle. We have a lot going on because there is china, jobs, and were looking at japan. Jon we will start with payroll. We are looking for 195 k. And over bearish tom keene is looking for 140, 150. He always does go below the estimate. Payroll is in focus. Chinese equity market is in focus. Then there is really important political news, several layers not just in europe but in brazil as well. We are keeping an eye on the news as it comes through. Francine i like that. It is like the ghostbusters intervening in the Chinese Markets ahead of parliament meeting. We will talk more about china. Tom lets go to our single best chart right now. This is my chart of the year two years ago. Darda gordon and michael know this chart. What is so important about gordons important book is it is not about the gloom now as much it was about as much as it was about how fortunate we were, back to lbj and next in. Growth was so fast for so long. Have we ever seen that in any global history of economics . Did we ever see what we saw in our boom . Robert the best figures below beforethe best figures 1800 were in the u. K. The u. K. Group at 0. 2 . In contrast, for the last 150 years, we have been able to double our standards of living every generation. This is the current generation, the millennials, the first that do not have a good chance of doubling their parents standard of living. Many of them will wind up with a lower standard of living than their parents. Francine are we reading too much into the jobs data today . Core inflation is a little higher, but because of turmoil, china, world growth, and u. S. Politics, janet yellen cannot do anything. Michael i think we focused on one particular number too much, particularly with employment data. Better to look at a 12month average, libya six month average for the Unemployment Rate to identify trends. Job growth has been Strong Enough for the fed to believe it is time to start to gradually the risk in a slow growth, low rate, low equilibrium Interest Rate environment is the fed may not get far along with its tightening before the Business Cycle is up against a potential expiration. That is a big risk for the future. Tom lets look at the chart on median household income. And youant to see this have a bloomberg terminal, there is the code. It is a bit convoluted. Even i can memorize this on a friday. People only available to with the bloomberg terminal. From your mortals, you can see it on our social media as well. Here is the most important quote from gordon. It is not in his book. It is in one of his wonderful recent papers. Tom Robert Gordon, does that say it all about the time we are in . Robert it is very ironic that the computer age did create a 10year period of healthy productivity growth between 1995 and 2004. Most of the benefits of the computer, changing the way business operates, has reached a plateau. About 10 years ago we had the flat screens, the internet, the web. , probablyng things the equipment in this room is not that different than it was. Tom push against that, michael darda. We cannot have the gordon worry about not going further. Michael the Median Income chart obviously if we could move toward some reforms, it would help, whether it is immigration reforms, reforms to education, tax code. That helps at the margin. The other thing that would help is a long Business Cycle, a record long Business Cycle with an ongoing tight labor market. The upswing in median Household Incomes has not started in the last three Business Cycle expansions until we are four years or so into the upswing. So if it is going to be slow, we need a long expansion. We are already beyond the historical average. That is a critical piece. Tom francine, did you have fun this week . Francine it was great. Tom it was a great way to end it on television. We will continue on television we will continue on radio. Coming up, bloomberg , their coverage of the jobs report. On bloomberg radio, we will speak with alan krueger and bill gross. Have i did at a 30. Stay with us. Jon economists forecast 195 jobs in february 195,000 jobs in february. The shanghai composite rounds. Ff its best week chinese political leaders gather in beijing. Manager atoss, fund Janus Capital management, joins bloomberg for an exclusive interview. Jon a very warm welcome to bloomberg. I am jonathan ferro. With david westin. David we are delighted to be joined by Francine Lacqua. Jobs day, jobs decker lets rip up the script. Even though we have great jobs data, what can janet yellen do . David stephanie is not with us today