rate came down so far and has been holding there. it has not gone back up. >> it is a huge debate and i don't think you look at one jobs report, debut put together a sequence to my and the major theme has to be, are we in escape velocity? at is the big question we will see at 8:30. >> one number i will be looking at is the increase in average hourly earnings, expected up 1.9%. it sounds good but it is less than what we have been seeing. a lot of people would rather see people being paid more because it suggests growth and labor demand in the economy. >> anything else in the brief? >> there are no earnings. but we should point out the ecb will be holding a press seven: 45.at >> and the market closes early? > 1:00 p.m. the bond market closes at 2:00. >> a data check. within ecb meeting this morning, quiet. we drive to 17,000 on the dow. yields are back up. we have gone from 2.5 what ever to 2.63.p come on, courtney, let's go. the vix, 10.82. 16,998. i am back on watching dollar ruble as well. let's go to the bloomberg terminal. this is what the pros look at. adam is talking about wages and benefits. up to 2007 on wages and benefits, this is the eci index. off we go back to some form of lower wage growth. the whole debate is, do we get ramification they -- and then the ramifications. >> especially when productivity has been low at the same time." my former professor at princeton -- he says you have not seen that yet. there is proof positive it has flatlined. >> we will talk about the janet yellen speech today. an important speech by janet yellen, appearing with christine lagarde yesterday at the imf. front pages this morning, there is alix steel with our front page. >> janet yellen and christine lagarde talking about the economy at the imf. basicallylagarde saying the global economy will not return to the pre-crisis world. there has been the new normal created. she says there have been various aspects of financial reform that has been changed but a lot remains to be done. and you heard from janet yellen, what you were referring to, saying financial instability should not lead to any kind of rate change here and she flagged pockets of increased risk-taking in the financial system but said it is not the central bank's mandate to deal with that. very different from what we have heard from other banks for international sentiments -- international settlements. >> yesterday with madame lagarde, who frankly i think is much more in the b i s bill gross camp. this was her most important speech in recent time. >> also, janet yellen making the fed raises rates to combat any bubbles, that might have bigger ramifications overseas than just letting the bubble be. >> alan krueger is with those in the 7:00 hour as well, and we can talk with him about this as well. not agree withs janet yellen on this, it is just that simple. >> we are talking about the experiment that broke earlier last week. journal" isreet looking at the facebook data science lab, very few boundaries. that was the unit that offered news feeds to facebook users to more positive or negative posts. the unit one slots -- >> tom cried? >> it was a one-time thing. it also learned that this unit locked out users to identify anti-fraud measures. no one loss permanent access over time, but these sort of data points is what they do. but it is not all terrible. they do not all mess with your emotions. non-techy boy here. what is the sum of this here? >> why are we surprised? all thisare putting stuff out there. the fact that someone is collecting what is there to be observed should not come as a surprise. >> you put the box. >> with the terms and conditions. >> people are not only using facebook less, they are using it dramatically less. i may be wrong. >> facebook is taking a step back saying the tech had been poorly communicated, that they are looking to make some kind of improvement. they were caught off guard. thethird front story of day, president obama criticizing wall street's onus-driven culture. that is an interview to be aired -- bonus driven culture. that is an interview to be aired today. he says the unfinished piece of business is to address banks that take big risk because the profit and bonus incentive is there for them. he says the problem may acquire that may require additional steps, but we do not know what those steps might be. he says the banks need to change how they work internally to alter incentives for traders. he had a great quote that said in the event of a bad debt, you end up leaving the shop but everybody else is left holding the bag. you might get the money, you might be off, but it is the taxpayers that end up footing it. different types of banks out there. >> those are front-page stories today. >> jobs data, our guest host this hour, michael has been very helpful to us on commodities in the markets. asset management. he is going long this week with a four-day work week. matt is with us from bloomberg news. right to you. the president is going after bonuses. always an easy target for a politician. has the bonus doctor changed in your reporting? >> that marketplace radio iterview you gave today -- gave an interview -- that he gave today. i give an interview to mark up his radio and it is not a big deal. i thought obama was done with wall street. i was surprised when i read a preview of that interview, especially because one of the reasons i am with you is to talk about the story that i wrote with my colleagues about goldman sachs. it seems like these are hard times for wall street. you are reporting and christine harper is reporting and others at bloomberg news -- has the bonus structure changed? talked to,le i people feel they are being paid a lot less than they used to and it is harder to make the fortunes they did in wall street. >> michael, you have been an observer for this for years. is there a new bonus culture on wall street? is the president behind the story? >> no, he is flogging a dead horse, i think. if you look at what happened 15 years ago, they just -- they started destroying the sell side and it is somewhat depressing to see the president banging on this drum, and i think it shows that he has simply run out of ideas. bonuses forget that the are things that pay taxes, that pay alternative minimum taxes? people get a bonus, and i believe it is not a net clinging to the household? >> 1 wall st job creates eight other jobs because you are theng a lot of money and wall street guys spend that money. trades that are paid bonuses are where we get interest rates back down. the idea that wall street is this great evil is at best simplistic. >> have you seen any budgeting on this fourth of july weekend on this mainstream versus the great evil? is there any change in the dialog? >> there is a lot of angler dash of anger out there, and i think the wage growth is part of it. fed policy is a move toward addressing the inequality as a concept, which is a remarkable shift. wall street is an easy target. it is well-paid. , talkingelson with us about the gossip at goldman sachs in a bit. it is an outrageous article to talk to it. with us asoul is well. we will get to his view on commodities as well. alix steel has our company news. >> aig says there will be no need for a second government bailout. the insurance company got that got the biggest taxpayer rescue ever could divest units and hauled policy sales in the future crisis. was required to come up with a plan in case of another crisis. now it is chrysler having problems with recalls. regulators want to know why it takes chrysler so long to fixed -- to fix jeep, linked to dozens of deadly fires. the company says it will not have the necessary parts until next month. the government has awarded another contract to a security company accused of fraud. the company, u.s. investigations services, is also the company that did the bad rep -- the background check on edward snowden. u.s. investigations services was never barred from federal contract. that is company news. >> when we come back, we will talk about the new goldman sachs lawsuit. two former employees are suing the bank. is this a one-off, or does its thing to something -- does he speak to something bigger? we are streaming on your tablet, phone, and bloomberg.com. a day before the fourth of july, good morning, everyone. ♪ >> good morning everyone. i have to keep my glasses on because it is jobs day. up, betty liu will speak to mohamed el-erian. dr. el-erian will join betty liu on bloomberg television worldwide later this morning. this is bloomberg "surveillance ." i'm tom keene. adam johnson. scarlet fu demanding the day off. alix steel came in. dollars for a good reputation. what matters more when it comes to wall street? goldman sachs is facing a lawsuit over its boys club employeee, a former complaining about his small $8.5 million bonus. these headlines are really sexy for media to talk about, of course, but what is the biggest distinction between the headlines we see now and five years ago? >> when you put things in historical context, it makes things now seem less exciting. wall street 10 or 20 or 30 years ago was not exactly a good healthy place in some ways. but it was a lot of fun. 's to your point and alix point, there was question of behavior. >> it is not fun if you are a woman and you are feeling victimized by the culture. it is a relatively old lawsuit going on for three or four years. thetwo women who brought lawsuit want to make it a class-action lawsuit. there are court filings where they are asking the judge, we want to make this into a class-action suit? >> why would this be a game changer for goldman sachs? toit is a much bigger threat goldman sachs than just from one or two people. what i found interesting is that it has filings from women who worked at goldman sachs and they give first-person accounts of what it is like in the bank. they give allegations and goldman sachs denies them. , almost describe telling stories, about traders calling women bimbos or a former beauty pageant winner was brought in and the men world mocking her. the men would go to strip clubs and would not ask the women out to socialize with them, and then when they would, they would mock them. >> does this have some traction, like some of the work that susan until a has done for bloomberg news, or is this just people looking for a payday? pros say about this specific case? david wells obviously says, from lloyd blankfein, there is nothing here. what do the pros say about this specific case? >> adam said he went to princeton and studied under -- which i did not know. areink some people like you more swayed by that and the cultural anecdotes. >> max, i want to know what the pros say about the specific case. clients to a strip club? i don't think lloyd blankfein would approve that. i don't think that would get approved at goldman sachs. but you are saying within your article that they did. sayse princeton economist women are paid less as vice president and associates, and the vice -- and the numbers are pretty stark. isseems that the problem more broad, and if you are asking about legal opinions, that may be more trouble. uphow does that stack against other banks? is goldman sachs really out on a limb here? >> goldman sachs certainly always seems to be the bank that comes up in headlines. on the other hand, if you stopped and took a look at all the headlines with wall street banks, this one i am not sure is in the top three. we are seeing one of the biggest banks in europe getting charged for clients doing deals with sudan and iran. it seems like we are in this moment in global banking where inse huge organizations their different ways are doing things that are illegal and scary to people. >> you made the point that there may be the evidence, according to a princeton economist, of pay disparity. that is economic -- those are hard numbers and they are irrefutable. that is a much different place from anecdotal he said/she said -- not to underplay that -- but speak to the severity of the pay discrepancy between men and women at goldman. >> goldman sachs, one person familiar with their strategy -- my sense is that goldman sachs says do not trust the statistics. however, in the report we have, it lays out clearly that using statistical analysis of goldman sachs' vice president and associates from 2003 two 2011, women were paid 21% less than lessand were statistically likely to be promoted even when they had the same types of employees. >> that is wrong. that i can understand. that to me is crystal clear. that is plain wrong. equal work, equal pay. have the same we talent leaving and where do they go? adam? >> coming up in the next hour, it is jobs day. we will have alan krueger from princeton university, the former chairman on the president's council of economic advisers. he can help us sort out the data and make sense of it for all of us. is the economy doing better or worse? this is bloomberg "surveillance" on bloomberg television. ♪ >> good morning, everyone. bloomberg "surveillance." tom keene with adam johnson and alix steel. scarlet fu is off, off, off. >> arthur has begun the season as the first hurricane. so far it is only category one, the weakest class of hurricane. the wind is at 74 miles per hour. no mandatory evacuations along the carolina sure as yet. those are some of the images we see brewing. nicolas sarkozy says prosecutors are trying to humiliate him. he has been charged with anduence peddling influencing campaign financing. he denies any wrongdoing. , the average price per gallon is now $3.67. it cost me about 92 bucks to fill up my car last week. that is the most we have seen for any independence day since 2008. the fighting in iraq has raised crude oil prices. futureses up 2, dow down 15. here is alix steel. ceo spoke to betty liu about the streaming success during the world cup. take a listen. >> our average television rating is up 39% despite the fact that that is up that much -- digital viewing has been through the roof. this is already the most streamed sporting event of all time. we are now 70% beyond the sochi olympics. we will be more than double the sochi olympics before this is over and that was the previous high water mark. >> a lot of good stats out there. "the financial times" saying they u.s. fans make up of their global audience. >> i think they have done such a good job at that table in brazil. on television. just fantastic. >> they have been all over it. one other key distinction, this thing is not a phone, that is a tv. that is the change. >> and you c.l. otter post on twitter as well as facebook. -- and you see a lot of posts on twitter as well as facebook. someone save me. save myself brady twitter question of the day for everybody -- are you feeling less or more confident about the american economy this fourth of july? ♪ >> good morning, everyone. bloomberg "surveillance." it is a representation of the fog in new york city, over what is going to happen in the third quarter. nobody has a clue. great opinion. we will bring that to you through september 30 at bloomberg "surveillance." new york city, july 3. "his is bloomberg "surveillance at our world headquarters next to bloomingdale's. tom keene with adam johnson. alix steel is in for scarlet fu. a data check -- mario draghi in jobs -- it is too much information. 1970.tures dow showing the complacency within the market. is the stock market ahead of the economy, or does the market simply follow along with observed economic data? with the intraday peak yesterday surges98 .70, the market ever higher. shaoul isl -- michael an expert at observing the strange linkage between stocks, bonds, currencies, commodities, and our economies. what sticks out for you as we begin the third quarter? >> you have key equity indexes close to big round numbers. you have the s&p at 2000, the nasdaq 100 at 4000, the dow at 17,000, the dax at 10,000, and the u.k. at 7000. call onay that on your the commodity slowdown. you nailed that. what is the michael shaoul message linking them? >> i think the commodity slowdown is over. commodityitive on the sector in general, and i think the worries about china are overdone. what are under done are the opportunities for commodity rebound in japan, the u.s., and europe. with will do this later janet yellen, but it again speaks to the bubble and the nonbillable -- the nonbillable blown off -- the non--bubble blown off. why is the super cycle not over perhaps versus -- >> financial flows of anything have been negative. sentiment has been going negative toward the commodity sector. this looks like a real move. >> what you do is look from the top down. you find big investment themes and you invest in them. china is rebounding, picking back up, too much negativity. that is one theme. janet yellen and every other central banker out there supplying capital. what is the third same? >> the most important theme is how much slack there is in the global economy, particularly the u.s. economy. there is much less capacity than -- much less capacity there than central banks think there are. you will start to see substantial price distortions and substantial supply distortions within the u.s. economy. >> are those distortions michael shaoul talk for a bubble? >> i am more concerned about her lack of control over the financial economy than the physical economy. >> i think we are headed for the genuine inflationary cycle. the fed is looking at -- they are accessed about issues such as wages, which they do not actually measure. >> here is the old regime, the new regime. you say they have this wrong. they are looking here, but they ought to be looking up here. >> this data is brought to you from the guys and women who saw the gdp shrink by 2.9% in the first quarter. when you look at the big economic statistics, the first question you ask is are they actually measuring this stuff, or are these crude statistical estimations? it is a crude statistical estimation when you look at the data. i do not believe that u.s. wages are still moribund. when you look at corporate statements and look through corporate earnings and listen to corporate management talk, in a range of sectors, people are starting to get paid more. it has been retarded compared to other cycles, but you're at the point where labour has bargaining power. >> should we be looking at other indicators like railcar loadings that come out weekly, or trucking rates? >> i think all of that is good. we spent the last nine months poring over whatever we could get our hands on. >> is it going up? >> yes. >> at what rate? >> it depends on what data you are looking at. trucking data is at its highest point since 2007, 2008. >> david rosenberg, who has been ist, has beenn in the michael shaoul cap. -- the michael shaoul camp. your timeframe is shorter than his, isn't it? >> yes. i believe is a stronger economic cycle than he does. >> beef is beef, right? >> we will talk about that. commodities are not boring. >> the first but she will see inflation is not in cpi or even in ppi are and what you will see is a real dispersion of corporate earnings within the s&p 500 between sectors that have pricing power and parcel the costs onto their customers, and other sectors have to absorb the costs and we'll take it on the chin in the reduced market. >> have seen the cost being passed on to customers -- starbucks, chipotle -- and they are passing that through, to your point. right now?e do i buy >> i think it is the commodity related equities that you want to be in. semiconductors, for instance. we would view semiconductors as a commodity. semiconductors have genuine pricing power for the first time in more than a decade. >> fascinating. michael shaoul will be with us for the next -- for the rest of the hour. coming up, we will look at commodities. i will explain why you can beat -- what your beef fourth of july barbecue will cost a little bit more. this is bloomberg surveillance at bloomberg television. ♪ >> good morning, everyone. good four-day work week morning. it is bloomberg "surveillance." tom keene with adam johnson and alix steel. bill gross will join us on bloomberg radio. the quality of the guests are what matter here. here is adam johnson with top headlines. >> more violence in israel overnight. militants have launched over one dozen rockets into israel. no reported casualties, though. the palestinians are accusing israelis of revenge after the bodies of three teens were found at the west bank. peace talks brokered by germany and france. the germany foreign minister says the latest fighting in eastern ukraine has reached a dramatic wimax in recent days. earlier this week, ukraine resumed an offensive -- a dramatic climax in recent days. president obama has taken a shot against the wall street trading. the president said the unfinished piece of business is to do with the banks that take big risks because of bonuses. he said additional steps may be required to fix the situation. >> time for our single best chart. cue the music. hums] >> first of all, what are you guys barbecuing this weekend? adam? >> ribeye. >> tom? >> i am from rochester. white and red hot dogs. there is only one thing that goes on the grill. white and red hot dogs. what looks like beef is will be on the grill. the bloomberg barbecue index decided to track retail prices for seven foods at we commonly eat during the cookout. nds like ground beef, white bread, american cheese, ice cream. it is up over 5% in may, and in april it reached a record of $23.17. if you take a look at last month's cbi, year on year in may, you're looking at round beef prices 10% higher than last year. hot dogs over 3%. corn and butter, in which i slather on. but the butter that you put on the corn makes it so awesome is almost 7%. overall, food costs in the u.s. are 3.5% over the year. >> it is stake, stake -- steak, steak, steak. slope matters and it is ugly. alix, you nailed this a couple of years ago. the slope on cow is not like it has been 20 years, 30 years. >> the reason why it is particularly brutal is that right back here in 2012 we had that bad drought, so farmers had to kill their cattle early because they could not afford to feed them. i has long-term repercussions, as you see here, because you grow aall of a sudden calf. >> the herd got smaller. when you raise a calf from birth to slaughter, you have to get to the right market weight, and that takes a long time to recover. be asda thinks there will u.s. -- there will be a net port -- net importer of beef because of this issue next year. >> that is fascinating. i was in central texas a couple of years ago at the largest cattle auction down there. russ old me this is exactly what you are saying. he said the correction for higher prices is higher prices because that ultimately brings on more -- , ine go to max abelson charge of wall street gossip. are people paying that? is their comfort on expense accounts to bring that up? >> eye remover you and i talking about a place in new york only one year ago -- i remember you and i talking about a place in new york only one year ago called parm. you get a one dollar chicken parmesan. now i feel like carbone has overtaken parm, which is much more expensive. >> michael shaoul, where are we on the expense account now? >> it is a cheap expense as far as wall street goes. there are bigger line items in a wall street budget than a $70 steak. it does not bother me. >> a line item. >> in your research on this, what is the real message? cook on your grill? i don't know. that is what my husband does. >> cover the ribeye with olive oil, salt, pepper, put it on the grill. up 29% in the last year, although the ribeye steak will make that go higher. >> 12:00 noon tomorrow. b there or be square. photos, what have we got? >> we have three today. we will start with a dramatic one. number three, palestinian youths clashing with israeli police near the house of the israeli teenagers kidnapped and murdered by extremists on monday. >> in 24 hours, this has gotten more serious. >> it is the back and forth that is the middle east. >> iraq is pretty quiet, ukraine is really not pretty this thursday morning. >> correct. tension.some real we are talking about grilling in the u.s., and there is anything from his -- anything but celebration going on in those parts of the world. our number two photo of the day, a man take part in the u.s. naturalization ceremony ahead of independence day at the new york public library. >> that is a good feeling. >> i like that a lot. that kind of chokes me up a little bit. >> michael shaoul, when you look economics, immigration is a huge part of nominal gdp and the spirit of economic growth, isn't it? >> it is, and one of the problems with immigration in this country is it is very difficult with skilled labor. we have given up trying to employ non-americans. i am a non-american myself who came in a little more than 20 years ago when it was relatively straightforward with someone with the university to agree that university degree to come into the country and work. i don't see any great solution coming out of congress soon. >> the whole immigration debate, we have lumped everything together. sealing the border is one issue. legal amnesty is another. the other is pieces -- the other is visas. we have to figure this out instead of lumping it all together. number one photo of the day -- i included this for tom -- large crowds gathering for the "game of thrones" exhibition at the museum of art in sydney. what do you think of that? >> where is the exhibit? i want to see the exhibit. >> you were at the red carpet thing in new york, tom. 4.i have not seen season >> i read all the books so i am a little biased. they did a good job adding new things in there, pulling things from other books. people die. >> people die? don't say that, alix. those are photos and we will take a quick break. when we come back >> more out ofrs pulling money the largest bond fund. this is bloomberg "surveillance ." ♪ >> it is jobs day. futures up 16 at 8:30 we will go many said headline data on bloomberg television and bloomberg radio worldwide. i am tom keene, adam johnson with me. alix steel. scarlet fu is at home. >> facebook puts few limits on the unit that manipulated new ' news feeds. researchers would have been required to get a participant hospira mission for studies but facebook did not. the new experiment raised questions about invasion of privacy. a victory for tesla. the company will expand operations there. they argued that tesla should not be allowed to sell cars through company-owned stores. and salesforce.com looks at germany for growth. salesforce is competing with oracle and sap to get more into the cloud computing business. that is company news. >> it was another rough month for pimco and bill gross. total returns suffered its 14th straight month of outflows. we are joined now by mary childs, our very own mary childs, who is talking about what is going on. number one, esther gross, if you are watching, i am a big fan. -- mr. gross, if you are watching, i am a big fan. we love having you on the show. mary, what is going on? why are people pulling money out of the fund where the manager has been so accurate on his calls? >> for all the publicity and -- they create a lot of noise around the new neutral and all of this and people pay a lot of attention, but at the same time they are shaken from the last year. the returns have not been great, up .2% on the year. it is not leading the charge. >> .2% does not get my attention, but if you look at it within the bond market, where are the percentiles? >> 84%. 84% of hisrming at peers. >> he used to be right at the and he is90 8%, saying i will be at the top again, stick with me, but that is a tough thing for investors. >> i am curious as to how it stacks up against his competitors as well. >> it is specific to total return. double line had inflows for the month. industrywide, the trend does not continue. >> where is the money going? is it going into other pimco funds or out of pimco? where is it going? >> it is hard to say exactly, but the etf version of total return had inflows for the month. >> uncle shoulders with us. this is the curse that---michael shaoul is with us. he is human and the money goes out. what does michael shaoul do when you get the redemption call? >> i would say bill gross' problems look like my solutions. he has been wonderful. >> everybody at pimco, michael shaoul with a good analysis. >> how hard is it to get the bond trade right this year? >> joking apart, the new neutral is a radical policy and it involves the selling of volatility. i am not sure that is a great idea at this point of the cycle. it runs opposite to the way we see the rural -- to the way we see the world, but to his credit he says what he is going to do and does it. i will ask some of the tough questions -- i will not ask all the questions you gave me. your questions are vicious. >> thorough. >> thorough, just vicious. within that, he stumbled for a year. that is the headline here, that he had one year off and is getting clobbered. >> it is hard for investors to say we have been with him for 30 years, and even bill gross said last year, was this a 30-year bond market rally and i happened to be the beneficiary? he is one of the best traders who ever lived, but it is a tough time for any bond investor. >> when you talk to investors who may or may not be invested in one of bill gross's funds, what do they need to see to have a more positive spin? >> bill has always been an eccentric kind of person, and it used to be a funny, quirky thing, and it is unclear if that has continued to work. when he comes out and compares himself to justin bieber, that may not leave the audience feeling comfortable. >> the hardest debate mathematically is relative versus absolute return. michael, should we judge our mutual fund managers relative to their peers, or we do we look -- or do we look at absolute return , 0.2%, and fire the guy? >> i would imagine the 84ference between being the percentile -- i don't mathematically know, but my guess is that the turns are close together. the bigger question is where do you want your portfolio to be? are feeling is the bond market is the top place to be whether you are a talented manager or not. >> michael shaoul, thank you for joining us. max, thank you. you and me, party, tonight. we will do it like goldman sachs. >> oh, no. x reportll do the fore before i get fired. 79.6.terling, ♪ >> this is bloomberg "surveillance." >> it is jobs day. can america be a bountiful america of rising wages and wealth? 17,000 beckons on the dow. is it gelling -- is it janet yellen's bull market? costs aback to norway little bit more. that morning, everyone. this is bloomberg "surveillance ." live from our new york thursday,rs, it is july 3. i am tom keene. adam johnson is with me. alix steel is in for scarlet fu. alan krueger joins us from , the former chairman of president obama's council of economic advisers chair it is jobs day, thursday. >> tomorrow is july 4. >> give me a brief. area manufacturing services growth doubling in the second quarter overnight. rising at a record pace. at 8:30, we are focused on change at nonfarm payrolls, the unemployment rate looking for three -- for six point 3%. jobless claims, they have compressed a lot of data in. we would get the bloomberg as well comfort index as purchasing managers index on the services side. no earnings, but we will note that the ecb is holding its own press conference. atre is a rate decision 7:45. we may get more commentary about the additional -- >> jobs day, maybe market moving there. then you have the mario draghi headlines as well. we will do that for you on bloomberg radio and bloomberg television. >> that is the morning brief. >> i have the company news for you. lululemon is talking about taking the company private according to "the wall street journal." chip wilson has been talking to private equity firms and at last month pots annual meeting he said he was not happy with the direction set by lululemon's board. siemens wants to catch in -- to cash in on the natural gas boom. he wants to lock in long-term service contracts. target has a request for customers -- please leave your guns at home, even if local laws let you carry them in our stores. texas guns right group -- texas gun rights groups have pictures carrying guns through their stores. steel, jobs day, alix brent crude down from the 114 level. have we achieved escape velocity? it is the fourth of july, an america divided between haves and have-nots. that is not news. what is news is the entrenched anxiety of a part-time america. no one has been a greater voice on this than alan krueger of princeton. professor krueger, we did a for thel one-hour event council of foreign relations. how unequal is america with his jobs thing? >> we are one of the most unequal countries on the planet. about as unequal as we were in the roaring 1920's. there is a great gap between the haves and the have-nots. >> there is the scene in the robert redford "great gatsby" thee bruce dern pumps up at gas station. it shows the economic divide. no one believes it is like that now. what are we missing? when you look at our calculus of this labor economy, what sticks out to you? >> there is a tremendous cap, and what sticks out to me for the future is that children born to disadvantaged parents have fewer opportunities. they go to schools that are not as good, they do not get as much schooling. all that will compound the problem. >> i would suggest you have goldman sachs that has been way out front with this. those of us who are older do not understand the inequality of education now. i am still lost back in the 1960's, and i am wrong. >> had i not gone to princeton, my life would be very different. it changed my life. i had that access. i get emotional when i talk about it. the hedge to take out fund guys at the very top and to look at a more normal distribution, is there still that kind of extremism within america right now? >> we would still have this pulling apart, but the financial sector is a big part of what is going on. that may be accounts for a quarter of the rise in the top 1%. but inequality at the bottom line is a bigger problem than the top 1% of everyone pulling away from everyone else. >> the real question is, who is not employed? wind up resetting? >> that is an excellent question. my research digests the long-term unemployed become discouraged, exit the labor force, and have difficulty getting on their feet and coming back. in the past that is what we have seen, and it is what we are beginning to see now. bowls say that part-time is becoming full-time. a shift from part-time america back into full-time, full week benefit at work? >> i think we will see a gradual to -- a gradual shift back full-time work. in the recovery, it has been pretty stable. a lot of the job growth has been in full-time jobs, it is just that we are starting with so many part-time jobs because of the recession. i also think going forward we will see more flexibility at work, partly to attract more women in the workforce. i think that may mean an additional number of part-time jobs. >> bill gross and jim glass will join me later on bloomberg "surveillance" around the eight: 30 hour. also the ecb meeting as well. 8:30 hour.he also the ecb meeting as well. >> economists are now forecasting a gain of 3% for the quarter that ended monday. peter cory is explaining the in theop and the rebound "bloomberg businessweek" era. what is driving the sudden rebound, down 3%, up 3%? >> i think the first quarter was really a fluke, not characteristic of where the economy was. it had a lot to do with the weather, with craziness going on in the health-care sector, obamacare. we do not really know exactly. the second quarter will take a real number. a good strong number, and i think that will be reflected in the june jobs number. it is overall the longest sustained healthy growth we have had, back in december of 2007 when the recession began. >> within your research, do you believe in the trickle-down effect, or is it almost trickle up? within the productivity and the mix of the american economy on this fourth of july, and we get a trickle-down effect as the haves do better? >> it is not like the billionaires are directly 99.99%, andbottom overall there is something to the idea that a rising tide lifts all a lot of boats. to say that you can rely on that as the sole mechanism, that is the problem. a strong economy is a prerequisite but not the sole solution to the inequality problem that alan krueger was talking about. >> we are also getting trade balance. i am close -- i am curious how closely you are paying attention to the trade balance. what are you looking at in the second quarter? >> i don't have an exact number, but the surprising thing is how well the u.s. exporting is doing given that the rest of the world is not seeming that healthy. you would think you would need stronger growth there. >> we need to rip up the script there. professor krueger, one of the great debates right now is to do export-importevil bank. alix steel mentions the importance of exports. -- do we need an export-import bank? >> i think it helps. now is the wrong time to have this discussion. we need to increase exports. we have a big trade imbalance. i don't understand the motivation for making this a top priority issue now in the republican caucus. i think it is a misguided policy. >> may i suggest there is common ground between alan krueger and john b taylor out of stanford? against anmist is export-import bank? >> i don't know of any. >> it seems ideological to me. but if you have an ideological battle, have it over something important. have it over something that is significant for the size of the economy. this is increasingly helping small exporters, helping to improve our trade balance. i don't get why they raise it now. >> alan krueger with us for the hour. come in tomorrow at 9:00. businessweek," look for the new issue out in a number of days. a jobs data check -- equity s&p futures up, too. >> are tortured of the day -- are you feeling more or less confident about the american economy ash our twitter question of the day -- ♪ >> good morning, everyone. bloomberg "surveillance." i'm tom keene. this is what matters to alan krueger, our guest host. he is one of the most eclectic and wide ranging interests in economics. on july 2, 1964. the half-century of improvement seen due to lyndon baines johnson's civil rights act. i remember how contentious it was. successful civil rights act? >> i think it has been remarkably successful and is an example of economics where the research was initially quite controversial. some people argued it had a beneficial effect. others argued it was illusory. it was not beneficial, and the consensus is that it had a very beneficial effect, helping african-americans narrow the gap between everyone else. >> where is that debate in 2014? >> i think it is still with us. we still have tremendous racial inequality. it is more subtle. it is harder for public policy to address, but it is still important that the federal government remain vigilant when it comes to discrimination in the workplace. >> we have seen demographics do better and do worse, and i know this has been a part of your research. other minorities have struggled along. what is the best economic research, what does it say about the partition of our minorities in 2013 -- in 2014? >> the gaps have been growing, but mainly because we are seeing a spreading apart between the bottom and the top. minority groups at the bottom are swimming uphill, swimming against the tide. when you adjust for the rise in inequality overall, we are still seeing a continued narrowing of the gap. >> what do we need to do k-6, k-8 in education? are we succeeding there? k> we have to start with pre-g y and do better with pre-k. has talked about preschool and we need to find a better way to pray for it. -- to pay for it. it helps in those grades you were talking about and it provides the foundation for k-8. >> very good. alan krueger with us from princeton university. he will talk about janet yellen's very important speech. i did not expect it, i got this wrong. arguably with the speech of her tenure and her time. coming up, we will talk. that cash in on your grilling plans. we will tell you what is going on in california. it is bloomberg "surveillance." ♪ >> good morning, everyone. bloomberg "surveillance." good fourth of july. i am tom. jobs day on a thursday. adam johnson, and alix steel is in for scarlet fu. alan krueger is the former chairman of president obama's council on economic advisers. adam johnson, also princeton university. arthur has become the season's first to regain. only category one. the wind is slightly over 74 miles per hour, and fortunately there have been no mandatory evacuations on the north carolina shore. president obama is taking a shot at the culture of wall street trading desks. the president said an unfinished piece of business is to do with banks taking big risks as of bonuses. he said additional steps may be required to fix the situation. if you were expecting to get in the car for the fourth of july and drive somewhere, you will pay more for gas. the average price for a gallon of gasoline across the u.s., now $3.67. that is the most it has been on independence day since 2008. the fighting in iraq has driven crude oil prices up about 4.5% over the past month. we have been talking about that. this four dollars a gallon is different than the last four dollars per gallon. overtime you can adapt, just saying. >> a capitalist before the three-day weekend? i don't think so. the raging labor debate is over the minimum wage. economists collegiately agree to asagree over the efficacy of $15 minimum wage. the they truly debate are policy outcomes of a minimum wage. alan krueger has found it overall societal benefit to the minimum wage. another economist is suspect, percent -- professor vedder. what is a $15 minimum wage going to do to seattle? >> well, i think a $15 minimum wage will cause some people to lose their jobs, and the question is how many. if the numbers are sufficiently large, the effects will be negative on people in seattle. there will be some gainers to be sure. there will be some people who make two dollars or three dollars or four dollars an hour more than they are currently making and they do not benefit, but others may go from employment to unemployment, from being above the poverty line to being below it. the minimum wage, in my opinion and that of many others, is not a particularly effective device for rising out of poverty. >> that is one school of thought, that minimum wage is not the solution to poverty. what does your research tell you? research in to do this area and others started to do research, and what we found is that moderate increases in minimum wage primarily help low-wage workers. minimum wage has to be part of the solution. it is not the whole solution to the problem of low-wage work and poverty in america, but it can be effective. >> there is the key word, alan krueger says "moderate." are we going to discover the best minimum wage by letting the cities and letting the states find that level? question. a good what is moderate? what is the optimal minimum wage? how can anyone say -- you mentioned stigler. he wrote the first definitive paper on this back in 1946, and i think what he said then is more or less true today. i am aware of the work, the provocative work that professor krueger has done. and many others. the law demand still holds. professor krueger uses the word "provocative." he does not agree with the good professor. paper used minimum wage being raised in new jersey fast food restaurants. it raise the economy as a whole? >> i think the minimum wage primarily has a redistributive effect. it helps low-wage workers, and there are costs to it, mainly coming from business owners who are now paying a lower minimum wage, probably than when they started their business. but nevertheless it cuts into their profit. into highered on prices, which affects consumers. dohave to weigh those as we in the u.s., and as other countries do. by and large, there is a lot of support for increasing the minimum wage when the costs and benefits are taken into account. >> is there evidence of an inflection point? mentions thevedder law of demand, but there is also a law of supply. it reduces turnover, leads to higher productivity. that offsets the effect on demand. there is some optimal level i would say where employment is not affected because you have some companies who fill vacancies and others who see a slight reduction in hours, and those are offset. we need to look at that inflection point. >> richard vedder, they do so much. we want to get you back on again. professor vedder with great research over the years on how the midwest was developed. >> fascinating stuff, and this is not something we can figure out right here. something we may be able to figure out -- whether we should fly norwegianairlines.com. we will talk about it right over the break -- after the break. ♪ >> good morning, everyone. jobs day, clearing skies in new york, but a hurricane off the coast of florida. it is july 3, gorgeous across all of america as we celebrate the fourth tomorrow. adam johnson and i will be watching france-germany football. this is bloomberg "surveillance picot tom keene -- bloomberg "surveillance." tom keene, adam johnson. you have a twisted story. >> that is one way of putting it. some candid remarks from rob ford, and the racist and homophobic language that he used recently after a two month stay in rehab. >> i was born with blonde hair and i will die with blonde hair. alcoholic and i am going to die and alcoholic. journey when you are an alcoholic. -- youan become an ace can become any sort of substance abuse addict. you can use cocaine. everything goes under that. i have abused it. >> cocaine? >> every drug you can think of probably. >> very different remarks and a very different rob ford from a couple of months ago when he was haranguing lawmakers and accused of hitting one. >> it is fourth of july. part of the reason we are having a fourth of july is that canadians saved our butts and then on to belgium. why is this bozo still around when i look at the rest of canada? i don't get it. >> keeps on giving. i don't get this stuff. >> marion barry of washington, d.c. no one person in one country has a monopoly on that. >> i have some numbers for you guys. 150 million. that is how many hotdogs we will eat this weekend. >> god. that is embarrassing. >> last year, 121 million pounds of beef was sold in the week of july 4. >> how much? pounds of beef, 54% than in previous weeks. most of that is ground beef -- burgers and stuff like that. i want to look at what that means on a retail level, who winds up making more money, how much do people really sell during that time. stop & shop, the new england division, rhode island as well as massachusetts, sells double the volume of ground beef and hot dogs in the week leading up to july 4. this is a big moneymaker for these guys. it is not about margin. you're making a couple of percentage points at most, all about volume of sales, making this week really important. when you factor in the weather, how many people will be grilling when you have a hurricane coming up on you, and what is the trickle-down effect there? barbecue for 10 people, do you know how much you will spend? 29% for10 people, up last year. >> that is still a bargain. >> depending on where you live. the majority of that, the majority of that will come from beer. we are not drinking budweiser or miller or coors. 15% is ice cream. 13% from chicken. ice cream is a huge driver for .hese barbecues >> world-famous economist alan krueger, what are you serving? >> i am actually going to a friends house. i am one of those other nine people getting the benefit. the $36.70 meal. >> retailers do not actually do that. grocery stores do not do it. they buy it and they sell it right away, so they are quite exposed to the rally that we have seen in cattle, hogg, chicken prices. >> that is ambiguity here. like higheroods food prices? >> whole foods can pass more prices on. they have more power to do that. costco, on the other hand, will wait as long as they can to wean market share before they pass on their costs. at the end of the day, we do not have any choice. if you need to eat, you need to eat. there is no other place for you to go. >> our twitter question of the good? are hotdogs giffen no, i did not mean that. >> there is more demand as price goes up? a quick data check. there it is. tom has the chart. where they markets are trading. we have a flat futures market, flat bonds, and a flat market. >> good morning, everyone. it is bloomberg "surveillance" on bloomberg television and bloomberg radio. plus direct conduit through bloomberg.com. jobs day. -- keene joining me with adam joint -- adam johnson joining me with alix steel. adam? >> good news for you. it could be a game changer if you are a frequent transatlantic flyer. norwegian airlines is offering direct flights to los angeles, london, new york. they are going back and forth and not charging you an arm and a leg. but there is a catch and we are joined by olivia sterns in london to explain. i understand you can fly one way real cheap but going home is going to cost you. >> this whole idea of low costs, long-haul, low frills, it sounds miserable to be on the flight, it will cost is you 150 pounds for a one-way ticket from gatwick here in london to new york. that sounds pretty good, not $250, $260 right now. the trouble is, a lot of people have tried this before. economics back then did not work for this. the difference this time, now they have the dreamliner. that is a huge plane and you can move a lot of people. it has a low earn rate on fuel, so it is more cost efficient. they are hoping this starts driving traffic across the atlantic come a flying people out from gatwick to l.a. watch out, miami, the british are coming. >> when i flew on a 787 dreamliner >> it costs costs, 350 haveus and its a something that can compete with the dreamliner? >> it is competitive, but i spoke with michael o'leary this morning, and he said if he had the dreamliner he would be going at this, too. ryanair wants to get into a low-cost, long-haul business, but they cannot do it. clearly the dreamliner is a big game changer. the problem there is there is no aircraft availability because all of the gulf carriers are buying them all at a time. they are all going to the gulf. the brits, andee invade miami, but can they get home? >> between the summer peak time, the trips will be more expensive. it could cost you 500 pounds, but the truth is if i am trying to get from new york to the south of france, in august that will cost $2000 no matter what i do. $1200, $1500,cost and that would be a lot better. >> olivia sterns in london. enjoy your long weekend over their bank or do we will see you on monday. alan krueger, we have jobs numbers coming out in t minus 55 minutes. bet you -- what will you looking at? >> headline numbers, jobs numbers. which industries. i always look at the temporary help industry. that is a harbinger of what is to come in the coming months. >> as you look at all that data, the bloomberg terminal, how are we doing? >> we are digging our way out of the big mess. the skatened velocity. a big hole to dig out of. because of the nature of the crisis, we will never see 4% growth in this recovery. also our population is growing slowly, our demographic is tilting away from us. >> within your study, if you bring back the billions of corporate profits to america and force some of it to go to jobs, does that make a difference? >> it depends on how we do it. did it work? >> know, and it was very costly. we need to invest more in infrastructure. i think there are better ways of doing it, but if congress could ork out something -- >> but the headline as a simple analysis does not work. talking about janet yellen, resiliency -- -- ourcentral banks twitter question of the day, are you feeling more or less confident about the economy this fourth of july? tweet us at -- tweet us@bsurveillance. ♪ >> good morning, everyone. bloomberg "surveillance." you need to know it is jobs day. morning,8:30 this betty liu. good morning. i'm tom keene. with me, adam johnson, alix steel. fu -- the yankees are 00 in baseball. >> she's at home crying. we will go to betty liu now. a lot of things going on. 30 -- atng out at a: 8:30. head ofskipper, the espn, they have been breaking ratings and online streaming records with the world cup. who knew that soccer would be the one to change the game on the over the top content? we sat down with him exclusively yesterday, and he talked about how big soccer has been for espn. >> our average television rating is up 39%. despite the fact that that is up that much, digital viewing has been through the roof ripped this is already the most -- has been through the roof. this is already the most stream sporting event of all time. we are beyond this of sheila dixon will be more than double the sochi olympics before this we are beyond the sochi olympics and will be more than double the sochi olympics before this is over, which was the high water mark. >> also, we are covering the jobs data. alan krueger will be joining us when the numbers break at eight: 30. also, mohamed el-erian, he's joining us as well because he says, look, we had bad economic market -- late in the as of late, and the market still went up in the first half. we may see some fairy dust in the market, a little bit of an illusion as to how rich we really are. areom, in the meantime, we waiting on the ecb rates decision. >> good morning to all of you in europe. -- fromnkfurt jury frankfurt, germany, mario draghi and his team, we go critically that press conference, which really moved markets last time. this is a sleeper now. this could be something at 8:30 this morning. >> it is really going to be about the details that we get from mario draghi in the press conference. >> what is the distinction here of the ecb ruling? >> two words -- communication and clarity. don't worry about the rates. we know that. we have that information. this is about mario draghi telling the market, do i mean low rates for two years, low rates for four? that is the distinction. that is what the market wants to know. are we progressing to nirvana, which is united states of europe quantitative easing style situation? if the market gets that, you could see a bit of a move on the euro dollar. euro to four digits, 13652. changing rates, so the market refinancing rate is .15%. wait to hear what mario draghi has to say. i know you will have a chart. have a look at it. you are going to love it. it is trying to fight everybody. not only fighting what is going on at the fed but over here, fighting the nordics as well. 55-pointcs when for a cut. that is a big move. these are the kinds of raghienges that d faces. >> manus cranny with us from london on the decision. to me, the thing with the headlines, there is a word there, "minus." >> we are seeing 10 year bond stay lower after that, but it is also about the long-term refinancing operation at the ecb -- that the ecb reimplemented last announcement, saying loans are conditional on banks, increasing credit supply. how do you measure that? how do you know if they are increasing at the right way? how do they measure how much each bank should wind up getting a loan? that is an issue people have talked about that we have not gotten clarity on. >> there is tension there because the banks are upping the amount of capital that they set aside as part of raising capital requirements in europe. alan, a negative rate for banks in europe. have we ever seen this before? >> this is creative economics, isn't it? >> he has thrown a -- he has thrown everything he has had at it. >> is a going to work? >> i don't know what happens if it does not work. i have been struck by the commitment to the european monetary union. there has been a tremendous amount of pain inflicted, yet you don't see countries leave and you still see countries wanting to join. >> to continue the discussion, alan krueger with us. this is an important moment for europe. we need a data check. >> u.s. futures ahead of our own. unemployment data up slightly on the s&p 500. you can see the euro is relatively flat. the only movement we are seeing is nymex crude, down $.68, $103.80. >> good morning, everyone. ."oomberg "surveillance let's get right to our company news right now. here is alix steel. >> facebook put few limits on the unit that manipulated user'' news feeds. researchers would have been required to get a participant's permission for studies but facebook did not. the experiment raised questions about invasion of privacy. a victory for electric car maker tesla. lawmakers in pennsylvania agreed to let the company expand retail operations there. auto groups have been fighting tesla, arguing it should not be allowed to sell cars at company-owned stores. salesforce.com is looking to germany for growth. the ceo tells bloomberg the company is considering whether to buy german firms to could make cloud computing apps. salesforce is competing with oracle and sap. >> on the ecb, i like the report from stefan riker and jeff black . the idea is that we await mario draghi illumination. it is a non-newsy ecb announcement. two pips -- last night and the pips -- two pips of change there. we will of course address the , his pressi comments conference at that moment. back to jobs day, the ramifications for all of us nationwide. it is not in the text books. most certainly not in the text books that alan krueger uses at princeton university. there has been a great distortion after the great to anion, that has led extended financial repression. alan krueger on our reverse expectations. alan krueger on bill gross' new neutral. week somewhats agreeing with this idea. the guard at the imf pulling the imf for one or two years over to the new neutral. do you believe in the new neutral, or can we be more optimistic? >> i am on the optimistic side. the biggest scar from the great recession will be the smaller labor force, less investment in the u.s. from that new level, we will see continued expansion and growth. >> what drove the image -- what drama janetday, the image of yellen and christine lagarde. angela merkel it would have been great. >> it was a very substantive speech. i listened to it this morning and i was impressed with the depth that she went into with her speech. she made it clear that macro prudential relation is a first tool, as i think it should be, and when it comes to battling financial bubbles in the financial sector. i thought she could not have been more clear. >> its frame the debate. she believes that the fed cannot fix bubbles, right? >> i would not go that far. the fed is a major regulator. she talked about underwriting standards were the fed played a major role. she talked about capital standards where the fade that's where the fed plays a major role. ?> not in monetary policy >> she said interest rates were a last resort. >> this goes directly to your commodities, or you get a bubble once in a while. >> she talked about risk-taking. "bubbles"?hose thinkthe same time i credit is being highly constrained to the household sector, to the residential sector. we have this funny combination one potentialess area where things are overheating, and you would cut another area where things are not heating up enough, i would say. on a day when we get unemployment data, how interesting that one of the trends is that seniors are working longer because they cannot afford to retire. with interest rates low, they are just not getting the investment income. >> it has been an interesting development in labor force statistics. we are seeing older workers stay in the labor force law -- in the labor force longer. he will are living longer and feeling healthier at older ages. as tom likes to say, 65 is the new 40. though he's getting over a cold this morning. part of it has to do with, it took a big chunk of retirement funds. they are staying in the workforce longer. >> so who are the long-term unemployed? who will be left by the wayside? >> they are a mixed group, they tend to be wes -- they tend to be less well educated. they are more likely to come from construction and manufacturing but are from all over the economy. 36% are from the service sector. >> we have a surveillance casket out behind the radio studio. they will roll me into it one day. humility.talk about we love to have you here on this jobs day. robert holden, ed lazear at stanford, alan krueger at princeton. there is a lot of humility from labor economists that i do not hear from the policy monitoring guys. what is new about the job economy versus the certitude you had in july of 2007? >> i would say we are seeing slower recovery than i expected in 2007. i thought that we would see a faster rebound. gdp growth has been slower. i was too optimistic to start with, but that to me has been the biggest development. another thing we learned is that the financial sector had major impact on the rest of the economy. the housing sector had major impact on the job market. the problems we are seeing did not arise in the job market. >> collateral damage. >> speaking of, it is time for the agenda where we look at the story we are paying attention to today. yours is about this very topic, tom. >> listen, watch us as well. professor krueger talking about a healing there, we are getting better about it. i am not as optimistic as professor krueger. i think it is a part-time america, and the tapestry of this fourth of july is we have to rediscover a policy basis, the value of a full-time job. >> talking about the state of the economy, we had a variety of answers. one said very optimistic and list a lot of stuff -- u.s. energy boom, u.s. tech boom, equity boom, bond boom. >> grillin'. about certain industries like semi conductors that do have a lot of pricing power. other people not as optimistic. away, i we move further do not see a real prospect for meaningful economic growth as we friedmanher away from keynes.eens -- toward >> we have a very busy hour, so get ongoing. i agenda, i hope if you are traveling this july 4 weekend, you bring your credit card and a lot of money because it will cost you quite a bit at the pump to read u.s. drivers will pay the most for gasoline this weekend in six years three six dollars 67 cents a gallon, the national average. in six years. $6.67 per gallon, the national average. 35 million people are expected to hit the road this weekend, according to aaa, and drive 60 miles or more. this really hurts discretionary income. >> on my agenda, not driving. i will be staying put, watching soccer. it is real simple. 12:00 noon tomorrow. france versus germany. at 4:00, brazil versus columbia. alan krueger, where will you be watching? -- whowill be you be will you be rooting for, more importantly? >> i will be in my basement. i have to confess i did watch one streaming on my computer, so i was one of those statistics on espn. >> in six months, it is up 70%? >> did you watch it because you are at work and that is how you had to watch it, streaming? >> i have to confess, that is correct. are sticking around, and you will be with betty liu, as soon as the job numbers cross. alan krueger, princeton professor of economics. thank you, alan. >> "in the loop" is up next. ♪ >> good morning. it is thursday, july 4 -- july 3. all the economic numbers. lumbar economists and former ceo mohammed, author of the bestseller, "unintended consequences." and edward conard. jason furman will be on with us a little bit later. we are 30 minutes away from the june jobs data. gained 215,000 jobs last month. president obama taking a shot at wall street's culture in a radio interview. the president said the bank needs to change incentive for traders because the high payouts and are high risks and taxpayers are left cleaning up the mess. investors are waiting to hear what the ecb president says about last month's stimulus package. of measures he put out to stimulate the euro region.