Whether or not at this point in the economic pandemic cycle they need to spend that bullet. They will be doing some things that are more accommodative. It will be difficult for them to reverse that policy somewhere down the road. Jonathan mike swell of Goldman Sachs is with us. On treasuries, on bad news being bad news, is that your view of things, how high can we take 10year yield . Mike great to be with you, jonathan. On the there is a cap treasury market, and its really the result of looking away from the slow term where there are certain instances where people think about growth postcovid. We see significant vaccine implementation. The jobs report, it will take a long time to get back to normal. The fed will be on hold for the foreseeable future. As a result, you will not see a 50 basis point increase in the 10year. People should sit tight and recognize that rates will stay low for the foreseeable future. Today proves that we will be in this odd situation where markets will look forward but you have policies that have to catch up. A lot of people are out of work and struggling in the u. S. Jonathan everyone is struggling with getting comfortable right now. You need to get comfortable with what is going on around the world in front of you, comfortable with the outlook at the same time. That is an incomparable thing to do, to divorce the here and now from the outlook. What is your advice to people to do that . The most important advice for individuals and institutions is really to be very thoughtful about entry medium intermediate to longterm allocation. Dont get overly caught up in the short term. About we love to talk daily, weekly numbers. Particularly in an environment like this when we know there is a powerful vaccine that may change the game six months, a year out, you have to think about that. Sit tight, dont let the shortterm impact you from an investment standpoint. From a personal standpoint, policy reaction standpoint, the shortterm matters a lot. Todays numbers are likely to get congress to act prior to the end of the year and also to get the fed to get a bit more aggressive on the easing side. Jonathan lets talk about the fed. That was a lot of peoples take on the backside of this payrolls print. It would be stimulus to stimulus on capitol hill. Where does that leave the fed in a couple weeks time . Well they have to do something around the Asset Purchase Program . Mike there is a decent potential that in december they decide to extend maturities. Beasley that has an impact on corporate borrowing, mortgage borrowing. Think you have to move away and think about about the environment we are in. We have a significant amount of people who are unemployed, despite that we have this risk asset, very significant vshaped recovery, we have not seen it in a lot of individuals. That will leave the fed on hold for the foreseeable future. We saw the 2007, 2008 crisis. It takes many years to get back to full employment. A lot of people have to get back to work. It will take an extended period of time. Inflation is not a concern over the next couple of years. We expect the fed to be accommodative. Big output gaps. Inflation is low, the fed on hold, lets talk about credit. Investmentgrade you are overweight. Highyield you are overweight. Are tighter now than they were before the pandemic. Can you walk me through what is going on beneath the surface at the security level, whether there is still the disparity that existed six months ago . What are you seeing . I would sayoff, there is a big rotation going on in the credit markets. Initially, when covid hit, we saw that there would be accommodations, everyone jumped into the easy money, investmentgrade credit, people were very confident that you wouldnt have significant downgrades, defaults, and the fed was there providing liquidity. That easy money has been made. Credit spreads are back to where we were precovid. There is still the big debate that we touched on earlier around how do we get through the shortterm issue with regards to shutdowns, significant unemployment, and look forward six months to a year. I think markets are starting to do that. Ou are starting to see a shift we are moving out of where all the money chases high quality spreads, to dig in deeply, bottomed up, security specific, name specific, industries that are likely to materially benefit from an economic recovery in the second half of the year and into 2022. You are finding a lot of companies, due to the fact that Capital Markets have been incredibly open, companies have been able to bridge the gap. And thewhat the fed government have to do for individuals. They have to bridge the gap between the inability to work and the future world where we will see a stronger economy. What happened in the credit markets, thanks to the fed providing that liquidity due to companies, we will not see a high degree of downgrades, a lot of defaults. They gave Companies Access to Capital Markets. We bought them, took advantage of wide credit spreads, and they are fine, but individuals are not. The need for principle is there to get individuals onto the other side. Very important as an investor, when we are by 5, 10, 30year debt, we have to look over the longterm. We think the credit universe is pretty attractive. With the job numbers today, it is not good news that we have not seen the recovery we thought we would see, but we will see accommodation and a much easier fed for an extended period of time. That in combination with vaccines, getting Companies Back to work, getting Companies Back to investing leads to a really good credit environment. Rates, aral banks, low good economic environment. Jonathan just to finish on a point that you touched on, on highyield and the maturity, leveraged loans. Can you add a little bit of clarity on the kind of dynamics you think we need to Pay Attention to . We had in the financial crisis in 2007, 2008, a significant issue where companies did not extend out their debt, the fed was not as aggressive in terms of providing liquidity to Capital Markets. You saw a situation where we got very concerned in 2009 through we saw a lot of defaults. Debtlevel and breadth of intervention that occurred in april and march will be written about for many decades. This fed learned from previous mistakes. They went in big and broad. Providing liquidity to companies , we dont really have a rollover issue right now. There is no liquidity issue for companies. The fact that they were able to extend their debt leads to much less nearterm concern. Andttle bit of a slow down, with the inability for companies the clo find out that machine has the ability to pick up. Investors like us to look at the lawn market and say i am Getting Better than the leveraged loan market. Investors are fearful of rights not rising. We see a very attractive opportunity. Companies have extended out the debt. The clo machine is there to provide support. People talk about the low rate environment, how you can make money, with 1, 2 percent. Credit markets offer an opportunity. It may not be in the investmentgrade markets, treasury markets, but the credit markets offer some opportunity. Jonathan fantastic to hear from you, mike swell. Us, that doesor it for bloomberg real yield. More next week. This is bloomberg. Vonnie welcome to bloomberg markets. Im vonnie quinn. Todays top story, all about jobs. Of the weaker than estimated payrolls report boosting hopes for a stimulus deal. Lindsey piegza will join us with her insight into the postcovid labor market. We know what is going on with traditional jobs, but what about the gig economy . Yanisse, ceoaniel of checkr. We know that it has been an up down kind of week. We are seeing gains in the s p 500 and dow. Equities just rolled forward. 3690 on the s p 500. Off of our highs for the 10 is atbut the dollar index 90. 64, something to behold. Crude Oil Continues its march higher at 46. 11. The last jobs report of the year coming out today, payrolls weaker than estimated. With more insight from chicago is Lindsey Piegza stifel. We know we are probably headed into a second contraction. Is there anything that could prevent that . Lindsey it will be difficult but it depends on the second round resurgence of the virus and policies that we expect in terms of restrictions and lockdowns. The more we see in terms of andting businesses individual activity, this will exacerbate the pain being felt workers and others. It will really depend on these policies, on the resurgence of the virus, and whether we see artificial support from the federal government. Long before it becomes more than critical . It is already critical, but if we dont get stimulus in the very early days of january at the very latest, what happens to this economy and labor market . Lindsey right now, we are poised to lose significant momentum and could fall back into negative territory by the first quarter. We need that stimulus, that artificial support for workers and businesses that have been forced to close their doors, by force of their own. We need to see this pass yesterday. Certainly, by the beginning of the year, as we turn the page into the new calendar year. Many of these businesses have been able to bridge the gap for some time, but going into the end of the year, going into that key holiday season, if we dont see the consumer happy and healthy in the marketplace, many Small Businesses will simply be unable to remain in a solvent position going into the new year. We expect this to compound in terms of business closures, job losses, lost income, lost revenue, lost opportunities compounding likely into a negative quarter, if we dont see additional rounds of fiscal stimulus. Vonnie ongoing right now is an update for reporters on the transition team, what it is working on. Psaki says that they are in touch with congress on stimulus. If it doesnt happen early in the year, what is the worst Case Scenario you are modeling . Lindsey we are modeling a very moderate stimulus package. I use the word moderate, and it is relative when you are talking about a near trillion dollar package. That is what we are pricing in by the first quarter. If we dont see that, if we see less than a 500 billion plan, i think negative growth to the tune of low singledigit is possible. The lessxacerbated by we see in terms of fiscal support. We could drop down into doubledigit negative growth if we dont see further support from the government. Vonnie you are actually saying that if we dont see anymore federal support and you had mentioned support, and i said stimulus, but that is a better word, but you say we could see 1 gdp growth, and at least 9 , if not more. Are seeingready we the u. S. Economy lose significant momentum, particularly on the consumer front. Retail sales and consumption at multimonth lows. This is before we account for the increased restrictions and regulations that came into play as we moved toward the end of the year. We are already seeing an economy lose significant momentum. We are poised for positive singledigit growth in the Third Quarter fourth quarter. If we see the senses shutting their doors, it is likely that we see growth retarded to an extreme amount, falling back into negative territory, somewhere around 1 to 9 . We know the will and the mandate of the Federal Reserve is there to bring unemployment down. We also know the next treasury, assuming janet yellen is confirmed, will likely want that as well. Is there anything the treasury can do unilaterally that doesnt need the support of congress to help this labor market . Lindsey what we need right now is broadbased support. That will come through a congressional compromise. When you talk about less controversial picks by the presumptive, Incoming Biden Administration such as janet yellen, i do think she will help in negotiations, bridging that gap between both sides. At the same token, republicans have less of an incentive to negotiate with democrats, seeing that they will presumably control the senate, and have picked up seats in the house. There is less incentive to negotiate. The lasty likely that approval from the white house, that 1. 8 trillion, is nowhere near the level that we see, and stimulus comes in under that 1 trillion mark. Vonnie where do you see yields headed . Moment inve 1 for a the last few weeks. Do we stay below 1 through the new year . Lindsey 1 is the cap that we expect looking in hindsight. When we are looking at that vast improvement in the economy, Third Quarter, stollar growth, offsetting the decline in the Second Quarter in percentage terms, that is what the market is responding to, as well as optimism for a nearterm vaccine, giving us a way to separate the healthy from the sick. We are already seeing that loss of momentum. As we see growth slowed down, job creation slow, as we see businesses continue to close their doors, that will recap mix on the market. I expect to see a sizable correction in yields. To 50year could get back basis points as we get into the new calendar year. Vonnie thank you for your time today, Lindsey Piegza. This is bloomberg. Vonnie this is bloomberg markets. Im vonnie quinn. Time for a look at the biggest business stories in the news right now. The most famous commodity trader is calling it quits. The ceo of glencore will retire next year. He presided since 2002. He will be succeeded by the companys head of coal assets. U. S. Mortgage lenders having their best year ever thanks to the feds low Interest Rates and bond purchases. 4. 1s were originally trillion dollars, beating the record in 2003. Nine lenders that have gone public this year or planning to do so in the coming months. Between are increasing mcdonalds and its u. S. Franchisees. The fast food chain rolling out a series of changes that will result in bigger bills for the restaurant owners. Mcdonalds says it will allow them to make investments that will benefit them eventually. Now it is time for our stock of the hour. Being trapped indoors has changed a lot of businesses, and beauty care is one of them. Abigail doolittle is looking at ulta. Ulta is sliding on the day and they put up a miserable Third Quarter. Name this Sales Estimates by comp sales down even more, down by 9 . This has everything to do with the fact that folks dont want to go into the stores and shop, where you are touching things and around other people, and if you are stuck inside, how much makeup are you putting on . Adjusted earnings beat estimates, but on a yearoveryear basis, down 40 . Pretty incredible. There is some light at the end of the tunnel. They have very tough comps because this is such a strong store. In 2020, compared to the prior year, difficult comps. Miserable,0 is so 2022, the fiscal year, theres expect it to be a Real Recovery of about 36 . Lets hope that happens. There is a store close to me that generally looks empty, but they are not suffering as bad as some of the other cosmetic companies. They are actually up on the year, where the likes of revlon and others are slipping on the year. Lta outperforming the market. Vonnie the ceo was somebody that people were watching, everything that she was doing was helping. The stock has not suffered overall, close to its alltime highs. Is there any place in particular where ulta has seen the change . Abigail while some might be fearful to go to the stores to have that shopping experience, there are people who enjoy using the products. In addition, they have such a diversity of products, including skincare. While cosmetics is a larger portion of the pie, it is down 5 , and skincare has increased to 26 of their revenues. Helped them in this time where folks are not wearing makeup as much. Vonnie ulta is also mostly in the suburbs. A lot of people have been moving to the suburbs. Thank you. Coming up, hope for a stimulus deal mounting on capitol hill as more republicans back a bipartisan compromise bill. This is bloomberg. Its moving day. And while her friends are doing the heavy lifting, jess is busy moving her xfinity internet and tv services. It only takes about a minute. Wait, a minute . But what have you been doing for the last two hours . Delegating . Oh, good one. Move your Xfinity Services without breaking a sweat. Now thats simple, easy, awesome. Xfinity makes moving easy. Go online to transfer your services in about a minute. Get started today. Wannits timeight and for aerotrainer. A more effective total body fitness solution. announcer aerotrainers ergodynamic design and four patented air chambers create maximum muscle activation for better results in less time. It allows for over 20 exercises. Do the aerotrainer super crunch, push ups, aero squat. It inflates in 30 seconds. Aerotrainer is tested to support over 500 pounds. Lose weight, look great, and be healthy. Go to aerotrainer. Com. Thats aero trainer. Com. Mark im Mark Crumpton with bloomberg first word news. House majority leader steny hoyer says the house has enough votes to override a veto by President Trump of a crucial defense bill over his demand that it include a provision to strip a legal shield for social media platforms. The National Defense authorization act, that among many things, authorizes military pay raises and extra pay for troops on dangerous missions, has brought support in the house and senate. It is set to pass both chambers next week. It has become law every year for the past 59 years. Plantart Trumps Campaign in georgia for two republican candidates in the senate has sparked concern in the party that the president s efforts could backfire. Mr. Trump has repeatedly alleged that widespread fraud cost and victories in georgia and other key states. He has disparaged the states most prominent republicans. The gop fears that could divide the party and suppress votes for senators david purdue and kelly loeffler. In venezuela, political opponents of Nicolas Maduro are boycotting sundays election of the national assembly. Maduros socialist party is expected to dominate the vote, giving him control of the last meter is to should in venezuela outside his grasp. The opposition contends the election is rigged and has called