Jobs growth was Strong Enough to keep the economy growing but not Strong Enough for the fed to raise Interest Rates in september. The s p rising or tenths of 1 4 10 of 1 . You can see Even Health Care was again or which has been down all day long. Becauses led the way the fact that people think there will be no Interest Rates increase makes them more attractive. A lot of interesting things to talk about. Here we see both ticking higher on the day but they had both been lower after the jobs report and the markets reversed trends. That ended up notably higher on the day. , the fed isheories going to be on hold for a a while. You can get some of those yields up. We saw a meaningful climb at the long end of the curve in japan. Some believe the doj will change its framework. Boj will change its framework. Japan of course has been the leader in ultralow rates. There is this sustained reversal in japan. It could potentially reverberate. Data, weck to the jobs saw a dip is the numbers came out. Weve seen the bloomberg dollar index. We are unchanged right now. We have been talking about this goldilocks jobs report. Lets take a look at the dollaryen. Dollar. Eeing a stronger the yen is the worst performing ng 10 currency. Remember when we broke through 100 . A pretty Strong Performance on the week. This is obviously over some Economic Data we have had that has been better than expected. Its extending its game into a third week. I want to work look at a five day chart at the price of oil. It has been declining every day this week. Rally. See the end one contributor, Vladimir Putins comments saying he favored a freeze in oil production. Clear signals one Major Oil Producer once a freeze. Not getan see that did into the highest levels we saw thursday. Russia and opec together make up more than half of the worlds oil supply. Lets take a deep dive into the bloomberg terminal. You can find all of the charts we show you at the bottom of the screen. Im going to kick it off with svs. A way to see average volume. Volume over the entire day. I wanted to see what happened around the jobs report. Openedrning the market after a 30. The blue line over the green line shows we traded more than the 20 they average this morning. I am so used to seeing it below. That is interesting. I thought we are out of august. Lets take a look at september. Function. E sj e volume is lower than it was. In september almost always a game. This one red spot is the last two days. An average of the last eight years. Another thing we have been talking about is this trading range for the s p 500. The low volatility that we are seeing. Benefitt, one way to was with fuel buying. Since the best month 2014. Traders who bet investor great,es would remain they are making money after bullish calls at the fastest rate since 2014. Saiderivatives strategist they have flattened out during the rally back from the brexit lows. Few steep and to lower levels. That august. Y in this has been the way to go even though volatility has been so low. If we get a spike in volatility this may not be the way to trade. Nejra we will talk more about the jobs report. Showsas sent to me, it the Mining Industry unemployment plunging. The biggest decline in any industry was in mining. Here we zoom in. It was over 8 . These numbers are very noisy. You cant get a drop that far. It is amplified by the low sample size. It does raise the question of whether the collapse in the Mining Industry related to oil and other commodities is coming to an end as the commodities picture improved. Nejra lets get some more insight. Westbury joins us now from portland. Great to have you on the program. Obviously it is not unusual to have a disappointing number in august. You think the fed should and mail raise rates this month. Why . Guest the market doesnt expect it. That may be the only reason the fed doesnt go. They dont like to surprise the market. Inflation is picking up. Is strong. Ket unemployment is down to 4. 9. You could make a case the reason they did not gain as much this month is because the labor market is getting so tight. It very well could be there are people that dont want more jobs. That is why the labor market is slowing down. Wages will pick up in the fed will get behind the curve. Matt as the number one ranked forecaster, we take what you think very seriously. When do you think the fed is going to raise Interest Rates . It seems like everything is right for them to do it. They have been speaking out very vocally but you just know they are not going to. Guest at least right now the odds are 12 in september. I believe they will lift rates this year. One thing we have to remember is that all of history until quantitative easing started whenever the fed wanted Interest Rates to go up the way they did that is they took reserves out of the system. Now these days they are not touching reserves. Excessillion worth of reserves in the Banking System and all the fed is doing is saying rates are higher. Y are not run moving removing any reserves at all. It will not hurt the economy at all. All of these excess reserves are here. The money supply is still going to grow. The money supply is accelerating as rates go up. It is more attractive to lend. Nejra what i find interesting is you are a list on stocks even if you get this rate rise. At say the s p 500 will end 2375. Guest i do. That is roughly about 10 from where we are. We have said that all year long, even back in january in the dark days of that correction. It looks more reachable now. Profits are growing and if the fed raises rates, apple is still going to release the iphone seven. They dont care whether rates are half or 1 . Neither do the fractures or the people writing apps. Technology and entrepreneurship will continue even if rates are 1 . People have become way too focused on the fed as the driver of growth. They have ignored the entrepreneurship that is happening in our economy. , allation and creativity of these things are what is driving growth. Not the federal reserve. Negative rates are not going to work in europe. They are not going to work in japan. That is not what creates growth. It is not the Central Banks creating growth. It is entrepreneurs. Matt you are sanguine about the an employment picture because you say we are at full employment. That doesntthat exist. Either we are accelerating or weird decelerating. I have a chart of u. S. Aggregate weekly hours. ,ou see when we see a downturn this was a mediocre number. This has often been associated with recessions. Is the you not argue that it a slowing economy . Guest it is just a theory. I dont know whether that is the case. I am saying the fed could look at it that way. The percentage of people leaving jobs. Janet yellen has talked about that a lot. It has risen dramatically. People seem happy with the job market. You are not willing to leave a job unless you feel confident you can pay for yourself or you can find another one. The job market is pretty strong. There were some calendar quirks that affected hours worked an average hourly earnings. The number one cause of recessions throughout history is when the fed tightens too much. There is no way you can say the fed is tightening too much. We have 2. 3 trillion of excess reserves in the system. The that has not tightened. This is as far from tie as i have ever seen it. On oc a recession on the horizon. Guest i hope you can stay with us. Coming up, we know the headline numbers of the jobs report. We will share them with you again. We will show you some charts you need to see. We show you three of them. There is a count, next. This is bloomberg. Call it the perfect storm. We will talk about that a little bit later. I want to talk about jobs. Have met here for a discussion about the jobs report. Thank you. Is it doesnt really change much. What did you see . The one thing that jumped out is the decline in hours worked in august. It was broadbased. Some people think there may have been a calendar quirk going on there. The total aggregate amount of hours worked per work per week has been decelerating. We have the worst yearoveryear since july 2010. That might be a cause for concern talking about a slowing labor market. Of an hourach 10th it is like losing 120,000 people from the labor force . What dooptimistic you think about this . Age growth seems to peter out that is not good, right . Guest its not. No way is that good. I do think the calendar quirk is a weird way they sometimes the data happens. August is also one of the biggest upward revision months for jobs. If this is real it is not a great sign. This thewe have called plow horse economy. People get sick of me saying that. It just keeps plodding along. Every once in a while it hits a lump of clay and it may stumble a little bit but it is not falling over and it is not stopping. Every time growth weeks going on we have seen this how many times . Every time the economy keeps coming back and growing about that 2 rate on average, that is what we will have over the next couple of years. Guest i think it is a wide open question. In terms of the fed implication that is why september is no longer on the table. They are having this debate over if the slowdown is real. They have to sort through these calendar quirks. Are another thing you looking at is u. S. Construction job growth. People talk about housing and all the potential for Infrastructure Spending but it is slowing down. Guest construction job growth has been slowing. If you break out the blue line in this chart, it goes back to something we were talking about at the big decline in public construction spending. The rest of the Construction Market is holding up pretty well. That includes residential building and that sort of thing. If we could get help from the public sector, these numbers will look a little better. Nejra i see you nodding three what is your take . Guest it is absolutely true. Public sector spending has slowed. Im not hopeful for it picking up any time soon. Fromt deficit has gone 400 billion to 590 billion. The deficit is going to get worse from here on out very it is hard to come up with more money to spend. Yet the count on the private sector. Matt you are the ultimate freshwater economist. You advised the chicago fed. With Interest Rates this low and infrastructure across the country crumbling, shouldnt we borrow a ton of money and fix it . Guest ive heard that for years. Want tolem is if you cut spending somewhere else than go ahead and do that but the government is wasting a lot of money on a lot of things that have not helped the economy. That was the argument about wind power and solar power. Im not convinced it will if we spend it on transportation either. Nejra another chart might support your positive view even more. Talk us through this one. Teen about u. S. Black employment. Guest this is one of the brightest spots because we saw a pullback. And we got a surge to a cycle high. We are seeing on the lower end of the labor market, this is something we have been talking about, in the low end you are seeing signs of an excel region in acceleration in wage growth. Nejra thank you both for the conversation. Joe coming up, frontline shares have been thinking. Pec food reduction we will have the details. This is bloomberg. Matt the Worlds Largest publicly listed crude company has 45 . What is going on . The story, a great series of charts about what is ailing the tankard company. Onk us through what is going. But we can see is the frontline shares have been with west correlation african crude production. Although opec is producing record amounts of crude as mentioned, the situation is they have been expecting even more crude to be produced at the moment. ,ecause of these outages particularly in nigeria, there is less crude coming out into the market. Is a question of where it is being made. We just showed a chart that opec production is up at a record high. The problem is im going to guess mainly in nigeria, where they are not able because of the rebellion to produce as much oil as they could. That is dragging down the entire shipping business in west africa and im going to assume it is hurting them even more because they have spent so much money expecting to ship more and that money is now gone and they are shipping last. When couple of years ago situationhis huge where saudis decided to pump oil tankardsrude were earning a huge amount of money. What hundred thousand dollars a day in comparison with 10,000 they were earning not that much longer before. The tankard operators started catching on. It was getting them delivered to market now. It bit of the production they were expecting, they planned and for is not happening. It is a mismatch between those. That is compounded by the fact that the production is in west africa. China is the biggest journey for these in terms of making money. If they are traveling from west africa, that is a long journey. Does frontline expect the situation to normalize . If so, why . Expert. Ot an they are expecting it to normalize. I cant really talk much further on the facts that go into that. Thank you very much for joining us. Everybody should find her article. On bloomberg. Com. That is a great place to look very a quick break. When we come back we will continue to talk about the jobs market and the fed. This is bloomberg. The first word news this afternoon. Hacking of the Democratic National committee emails and documents was a Public Service according to Vladimir Putin. He spoke with bloombergs editorinchief in an exclusive interview. I dont know anything about that. You know how many hackers there are today. It is a difficult thing. We did not do this. Dont miss our special report. Who has beenident splitting from the soviet union in 1991 has died. He was 78 years old. He was cruel to opponents. Soldiers killed hundreds of unarmed demonstrators. Uzbekistan became a supply route for the worn afghanistan. Spain is moving closer to a third election in a year the parliament rejected the acting president s bid to form a minority government. Parliament now has until the end of october to reduce the government or new elections will be called possibly on christmas day. Released details about its investigation into Hillary Clintons use of private email. Among the findings, 100 state Department Employees have clintons private email address. Clinton denied during her fbi interview she was using private email to avoid federal open records laws. Global news 20 for hours a day powered by 2600 journalists and analysts. Thank you. A recap now of todays market action. Up and bonds down. The correlation was broken. Lessobs number pointed to chance of a september rate hike. That was good for stocks obviously. The equities market does not always like to see them. Higher asnd the week well. Rates climb which was weird. If you dont think there is going to be a rate increase theres no reason to sell the bonds you are holding. Continuing with todays jobs report our next guest says the weaker jobs number should not be a surprise. Joining us now is jim o solomon. He is ranked among bloombergs top forecasters of the u. S. Economy. Ever sodiction was slightly higher than what we got. I just want to get your take. Some people are focusing on the positive. Others are focusing on the drop in total hours. Economys current state a september rate hike is potentially perilous. I think they probably should. The labor market is improving. Number. Retty solid it was artificially low. There has been a pattern where it has been on the low side. The unemployment numbers looked strong. Claims, at jobless perceptions of the job market. That looks healthy. You can make the case for taking back some accommodation. Will they actually do that . That is a different story. Odds are they will not. It is possible. Potentially we would hear more from fed officials to give us more of a clue. Right now the odds are they hold off for more information. Matt you mentioned the Conference Board survey. It is pretty nice. Forcews how perfectly in inverse correlated. Is your take away from this dont worry about this report because data is out there . Theres nothing in this report to worry about and all. Year today averages is over 180,000 a month. What about earnings . A month ago the story was earnings were picking up. They revised up the july number. You go back a year earlier it was 2. 2. You are back to year. Those numbers are volatile monthtomonth. There may be some calendar issues with the way the calendar falls. I would not make too much of that. That said, that was weaker than expected. Employment rate did not fall. That is perhaps less urgency in terms of tightening. Those parts of the report were weaker than expected. Anythingp getting north of 150,000, the trend will remain down. They are fairly hawkish. 1 50 ise out and said twice as much as we need with the new entrance in the labor force to keep the Unemployment Rate unchanged. We should hike. We need to be higher than he are right now. Is there any reason that we need to have rates higher . Normal so to speak other than the fact it would give us dry powder to cut in a recession . Guest ultimately theyll make a judgment. Where will you be in one year, two years time. Unemployment rate is going to keep on falling. The core Inflation Numbers are up a little bit. More off of to get the pressure. Extreme accommodations, you need to take that back. In terms of the metric you keep getting the unemployment going down you will see more pressure on inflation. We are starting to see that. What has prevented the Unemployment Rate going down this bite no slowing in job growth is the labor market has picked up. It overould sustain time you could actually sustain 180,000 a month unemployment. Down 1. 1. Ear was it is all the labor force numbers. Is that sustainable . The fact that it is flat today does give this more time arguably. Nejra i what to pick up what you were saying about inflation. It was an economist questioning. It is going to happen soon. Two points. It has happened a little bit. It is not a big change. You go back a year ago. That number was 1. 3. There is a little bit of movement. Unemployment rate on average is higher over the past year and a half than it is now. Curve relationship, it drops below the hard to define full employment measures. We are just on the border of that right now. It is hard to say. Matt you think the market appreciates this point you are making . There is no wage growth, and i. 2 charts like the ones you have. There is some. Meme that there is no inflation has become so entrenched, people dont realize that it is there. Guest the numbers are below the 2 goal. There hasnt been much pick up. , whether it is the different core measures, multiple measures show an upward trend. The trend seems to be up. Guest if you look at the last year there is a move up. Personally i do think what we are saying is the upward pressure. In turn my view is it unemployment keeps falling you will get more upward pressure. It unemployment stops falling will we get a significant pickup, probably not. Matt do you Pay Attention of marketbased measures as being predictive or meaningful . Guest they are certainly important. Whether you think they are important or not. The survey ones are more so than the market based ones. There is some logic of selffulfillment. Whether you agree with it or not, fed officials clearly do. Nejra taking all of the different measures overall, do you think the u. S. Economy is Strong Enough to withstand not just tightening but a heightening cycle . Guest yes. There is a quarter of fed tightening it is going to knock this into recession i think weve got problems. Throughout this recovery, there is a threat to the u. S. Economy. Weve had a lot of Global International developments. We have this hit to the oil sector. , the average on jobs. I have a problem with the term terminal. The fed doesnt necessarily get to neutral. They probably go beyond neutral to get restrictive. I dont have a hard number on that area i only have a forecaster the end of next year. I dont have a hard number on that. Thank you so much. Nejra coming up we hear from the challenges ahead for european inflation and Interest Rates. This is bloomberg. Nejra finance and Business Leaders are gathered in italy discussing banks and what is next. Dutchr we spoke with a finance minister from the amber city farm. Guest Interest Rates have been going down for 20 years. Due to a number of circumstances , Energy Prices come Interest Rates and inflation will be low for a longer time. Readjust to that new reality. The u. S. Is already further ahead in the Economic Cycle, reaching high levels of an employment. We are catching up but we are not there yet. We need to continue our work. Could a rate hike derail the progress . No. T i dont think so. It depends on whether the timing is right for the u. S. Economy. In thenot as far Economic Cycle as the u. S. Is. That is different for germany. They are coming out of the crisis working through high levels of unemployment. We have to come down. Our Monetary Policy is in a noterent period and building it down. Perhaps even expanding it. Interesting pushing for Structural Reforms and fiscal investment. Can you give a specific examples of Structural Reforms you are going to be pressing your colleagues to make as well as specific requests for fiscal investment from your colleagues in berlin . Guest it is an ongoing debate. A lot of product markets and Service Markets still overly protected. A lot of professions are overly protected making it difficult for young people to enter the market. Growths potential extra if we could take away those barriers. On the tax policy side we have to reduce labor creating more jobs in the labor market. That would require tax reforms and in other countries, like italy or portugal there would have to be reforms of the legal system which are very important for a good investment climate. Those of the issues that get too little attention. A lot of attention goes to Monetary Policy. In my mind too little taking away the structural barriers to bring investment to a higher level. Matt i want to get your assessment of the confidence you have in the current great program. We have a reminder from the retail sales number the economy is dismal. The finance minister recently gave a domestic morning there were concerns about black backsliding. And criminal charges, the head over claims that it is his fault the budget data was understated. In light of all of these things, questions of progress on politics and this criminal charge, how confident are you greece is continuing to make Good Progress and will get out of this bailout without another adjustment . I am reasonably confident. Some of these reforms are difficult and will take time but we will keep pushing them and they will keep pushing them in athens im sure. If they take a number of additional steps which we have agreed that further disbursements to the greek government stand ready which could help to deal with other areas. That could support the economic recovery which is beginning to show in greece. That was the another nuns the netherlands finance minister. Nejra and we heard from Vladimir Putin. He talked about trade deals and partnerships, more of our exclusive interview is next. This is bloomberg. Nejra the russian president Vladimir Putin sat down with bloomberg foreign exclusive interview. They talked about russias trade partnership with china. It is completely achievable. At first we almost got to that figure. It was just under 9 billion. That figure was almost reached. They included a decline in prices. They include currents. This is simple. To sanctions make a difference . They are not connected at all. We have built that relationship with the peoples republic of china. See it as an unprecedented fight. The partnership, sanctions have nothing to do with it. The decline was due to connections with the decline in Energy Prices and the exchange rate. They are actually growing with regard to trade and economic relations with china. Moreare becoming more and diversified which we have consistently sold for chinese partners. In addition to trade, from one side of energy resources,ydrocarbons and natural gas from the others we have moved to a new level of appreciation. We are working on programs. We are developing and will develop a heavy helicopter. Were working on a new airplane. We are operating on machine processingn timber and atomic energy. We have already built a Nuclear Power plant. Two reactors are functioning. We will build another reactor. The goal that we set for ourselves today is being met. Nejra here much more of president putins interview online at bloomberg. Com. This is bloomberg. Matt dont miss this. The g20 kicks off this weekend. Nejra dont miss the u. S. Services on tuesday. Joe im looking at the apple event next wednesday. John with all due respect to amigos. Audios adios edition, we look at the wild summer in president ial politics and look forward to the fall campaign. The fbi released notes into Hillary Clintons in the practices. It includes the interview with clinton and the summary on how her server was use. Much of this has been reported. There are a few things we