The June Jobs Report and President's Tax Bill
43:03 Share

This is an iHeart Podcast. For enterprise organizations, managing all your food needs is a tall order. But with EasyCater, you get a single workplace food vendor with the tools and resources to make it easy, giving teams across your organization an easy way to order from a huge variety of restaurants, all on one platform. All while consolidating your corporate food spend so you can control costs, streamlining billing and payment and simplifying reporting.

Let's talk about.

Some other decliners. It's your short audio report on the day's winners and losers in the stock market. Second biggest driver in terms of points for the S&P 500. Subscribe to the Stock Movers Report on Apple Podcasts, Spotify, or wherever you listen.

That's BloombergLive.com slash GreenSeattle.

Bloomberg Audio Studios. Podcasts. Radio. News.

This is the Bloomberg Surveillance Podcast. Catch us live weekdays at 7 a.m. Eastern on Apple CarPlay or Android Auto with the Bloomberg Business app. Listen on demand wherever you get your podcasts or watch us live on YouTube. Claudia Assam, her leadership at New Century Advisors, her importance in academics and certainly pushing back against recession gloom over the last year and a half is noted as well.

Claudia, I have the greatest problem with our analysis. I just did the average unemployment rate back 50 years at 6%. We're at 4.X%. Is this a fully employed America even admit our gloom?

So the unemployment rate of 4.2%, that's basically what we think of as maximum employment. Now, remember, that unemployment rate over time, the demographics, like what's a good number for unemployment can change. So comparing back 60 years probably isn't the way to go. But the other thing about unemployment recently has been for almost a year now, it's been in a relatively stable range at a low level. So we really are in a good place. Now, the expectations are that we're not staying in this good place. But the starting point is important.

So, Claudia, how do you think the Federal Reserve looks at the labor market here? Is there a number where they say, hmm, we need to maybe think about our policy because we need to try to, I don't know, impact this labor market some way?

Right. I think it's important. Jay Powell has been very open about the fact that the FOMC is in learning mode, right? They are going to pour through the details of this data and all the data that they're going to get this month on unemployment, on inflation. And the thing is, it's for them. There's a couple of pieces. One, like I said, their expectation is that the labor market is going to weaken given all the policies that are in place. What they're wanting to see is, is it weakening gradually as they had been thinking it would? Or is it really moving quickly?

and that like that speed of weakening could tell them hey we can we can ease off a bit because you know there's enough demand destruction to kind of work against the inflation so that'll be important and the other big thing for them will be to try and figure out are we seeing shifts in labor demand which is something they could you know kind of help with by lowering rates or is it something about shifts in labor supply say from restricted immigration and that piece they can't do as much with

Claudia, before we go to the numbers in two minutes, the real wage, what is the trend right now in the inflation-adjusted wage that you see across America?

Again, as we're going into this period of transition where we expect inflation to move up, we expect the labor market to soften some, that should be putting us in a direction of less real wage growth. But we have had numbers that have been relatively strong in recent times. So I don't think that that's a particular cause of alarm, but it is likely probably to soften some.

in the near term claudia some with us with the new century advisor she'll continue with us as we look to the data a number of other good guests coming up commercial free across the nation here for this important uh jobs uh report to look at the markets here paul we've seen green in the screen all day it's tepid it's pre-holiday but nevertheless it's a lift to the market it's a lift to the market tom got the s p up five points the dow of 45 points the nasdaq up 50

VIX under 17. VIX under 17. Now, let's call that quiescent, as someone would say. And looking at the yield market, also pretty quiet out there, Tom. Got the 10-year Treasury coming in by about two basis points. 4.25% for your 10-year Treasury. And two years at 375, 376. I guess that's what I'd watch here off the report. Yep, so that's kind of what we're looking at right here. The two-year yield. Let me do that to four digits. That's the way we roll at surveillance. It's 3.76.

3.7682 for those taking notes on your commute this morning. And Claudia's on with us, and we will continue with her wonderful perspective in a moment. Futures up six, a wide set of 8.30 data this morning, much more than just jobs report. We'll see claims as well, and of all things, a trade balance for May. From New York City, America's jobs report.

And I'm John Tucker in the newsroom with the breaking news. Change in non-farm payrolls, signs of resilience in the U.S. labor market coming in much better than expected. 147,000 non-farm payrolls created for the month of June. The expectation was for 106,000. And right to the unemployment rate.

That actually is lower, down to 4.1%. The expectation was for 4.3% in the unemployment rate. So a bit of a surprise in these numbers. Again, resilience in the U.S. labor market just coming across the Bloomberg from Washington.

The Labor Department, Paul and Tom. John Tucker, thanks so much. A lift to the markets. Futures up 6 now, up 15. Dow futures up 100. The VIX, 16.45. We don't see that number yet. Wow statistics in the bond market where we go away from rate cut talk. The two-year yield, 11 basis points. That's the edge of ginormous as a move, 3.96%.

3.90%, seven beeps on the 10-year higher yield, even the 30-year bond out to 4.84 gets my attention. Paul, what do you see in the tape? Just as you mentioned, Tom, on the short end of the curve, a big move there. And again, we're seeing a lift to the equities. S&P now up 13 and the NASDAQ up 54. So a solid...

I guess resilient is the word, Tom. Underemployment rate comes in 7.8 to 7.7. I'm extending here, folks, so Dr. Sam can look at the data here. The revision is a constructive 5,000 up, 139 to 140 for the three-month average. Scott Landman, thank you so much for putting the nonfarm payrolls three-month average into ECO Go. Critically, folks,

It goes from 135,000, that's an old number, and then the next month up to 150,000. Check that from 141,000 up to a three-month moving average of 150,000. We go to Claudia Sam here. Thrilled that she's with us before we get perspective from Sarah Wolf at Morgan Stanley. Dr. Sam, is this...

Impossible to predict for pros like you because of the change in immigration in America.

So we have because we have so many policy changes moving at once in immigration, which can affect labor supply definitely is in the mix. Now, you know, it's going to take some time to unpack these numbers because it's not as easy to tell the story here. Right. Because the immigration stories we've had, you know, inflows in the country like really shut down. So you would think you'd start seeing slower job gains. It could put some down pressure on the unemployment rate. But here we've got.

you know, solid job gains and then employment rate moving down. So like it, there's a lot going on under the hood. And I think that's where you can get some pretty mixed signals. I will say, you know, if you look like this is one data release, it is very important. But if we look broadly across many other, you know, sources that we have, there is a direction of slowing in the labor market that we are likely to see. We didn't see it today.

That's great. But we're going to have to figure out what's going on under the hood here. On a directional basis, Paul, can we have a moment of silence for Anna Wong? Sure. I mean, she's just killing it. I don't know. Her vector was a higher number than survey. Yep.

I mean, I didn't nail 147, but she was a 120. I mean, above consensus. I mean, it's that whole Chicago thing, Tom. They're smart. It is. Well, not like Michigan, but you know, come on, Claudia, hang up the phone. Exactly. Go to Claudia here. Exactly. Claudia, I mean, when you look at the labor market here, it seems, you know, we've heard a term over the last four or five years, labor hoarding. Is that an economic concept you learned in school?

So I think, you know, this was a concept that came out of after the pandemic when it was so difficult to rehire workers and we had the labor shortages and we still see the imprints of that. You know, we got the JOLTS data for May and it showed that we are in this phase.

low-firing but low-hiring environment, which kind of fits that idea of, you know, once you get the worker, you keep them on, but maybe you don't expand the workforce. And that has been a feature of the labor market now for several months. We haven't seen an event that really, like, spikes up the layoff, so, you know, things have kept moving along. But that is, I think, something you could describe in the data. Dr. Son, one final question.

We got a 4.1% statistic. Sarah Wolf takes it out to eight decimal points. Forget about that. But the fact is I've got Chairman Powell, a July meeting, a 4.1% statistic, and a basic nominal GDP mystery, which is sort of kind of like pretty good animal spirit. How do you do a rate cut with a 4.1% number? Well, I think the other thing to add in this, you've got an inflation rate that's been above 2% for four years.

right like it's you you don't see the deterioration in the labor market right now and so the problem still remains that inflation is too high okay so i i think this makes it difficult for the fed to say we're going to start cutting we're polling today we're going to have a special crab uh crab cake report here at 8 55. dr sam lobster cold or warm lobster yeah lobster cold or warm lobster cold

Thank you. You can come back. Claudia, Sam, thank you so much. I can see me and Claudia Jackson Hole. Do you think there's a lobster roll at the million dollar cowboy bar? I don't think so. Dr. Sam, we adore that you come on each and every Jobs Day. For enterprise organizations, managing all your food needs is a tall order.

But with Easy Cater, you get a single workplace food vendor with the tools and resources to make it easy, giving teams across your organization an easy way to order from a huge variety of restaurants all on one platform, all while consolidating your corporate food spend so you can control costs, streamlining billing and payment and simplifying reporting. Easy Cater, your business tool for food. To learn more, visit easycater.com slash podcast.

Let's talk about.

We'll be right back.

That's BloombergLive.com slash GreenSeattle.

You're listening to the Bloomberg Surveillance Podcast. Catch us live weekday afternoons from 7 to 10 a.m. Eastern. Listen on Apple Podcasts,

CarPlay and Android Auto with the Bloomberg Business app. Or watch us live on YouTube. We have the wisdom of Patrick McHenry of the Carolinas. I can't say enough about his public service to the GOP. There's a photo on Wikipedia. He's like 12 years old with Bush the Younger as he slid into politics. Patrick McHenry, when did you get interested in politics? Very young. I was in middle school and high school. That's when I started covering politics.

But look, look at me now. I mean, this is the cruel thing of a long public career. You have all these pictures of, you know, I'm short, but there are moments where I went wide. Yeah.

Then the hair went white and then losing it. I noticed you're bowtie free today. For those of you on radio, it's a crushing view of Patrick McHenry. We like the tonsil bowtie today. What is it like when you are up the food chain of the GOP and President Trump calls you to jawbone, let's say, what's today, Thursday? Wednesday night at 7 p.m. What's it actually like when a president calls you up?

Oh, it's serious. Look, I mean, the challenge of being a Republican congressional leader these days is you have to suffer your indignities in public.

And in previous generations of politics, you got to suffer your indignities in private. And there's value in that, huge value in that. But this president knows his power and the power that he has over the Republican Party and among Republican legislators. And that's what we saw evolve over the last week in the United States Senate.

enabled by adept Senate leadership, obviously, putting deals together to get the reconciliation bill through the Senate. But we saw that in really...

in really major form in the U.S. House, where there were no offers of changes to the policy but brute force, and brute force moved it through the House of Representatives, or is moving it through the House of Representatives at this hour. So, Patrick, what do you make of this bill? What's your view of this bill as it stands now?

So it's it's a the way I've always thought of this reconciliation package is the extension of 2017 tax cuts with fewest changes necessary to unlock the bill.

So that is a it's a clean extension of the tax code with a few minor changes that are important to the president and delivering on his campaign message. That is number one. Number two, there are offsetting entitlement changes that aren't major in dollar amounts, but significant in political peril by touching Medicaid and Medicaid benefits.

used to be an area of healthcare policy for the indigent and poor, where Republicans had a winning message. Let's put work requirements here. Let's make sure able-bodied folks are not receiving a governmental benefit. Let's make sure that this is a social safety net. That is no longer the case. With the expansion of Obamacare in Republican states, this now is a very, very mixed population.

Populist Republican Party when it comes to Medicaid spending, government safety net, expansion of government safety net spending. It is not the old conservative party of cutting spending. And the third thing is there's a massive set of policies that are unlocked here.

and significant spending connected with this bill, about $300 billion of new spending. That is the president's significant agenda for defense policy, defense tech, American dynamism when it comes to manufacturing renaissance in the United States. There's going to be significant action the president's going to be able to take by unlocking this policy through this bill.

So those are the three components that I think of right now. And the deficit piece of this is really driven by the clean extension of the tax code, which was going to happen with Republican leadership. Patrick, the reduction in sum of benefits, whether it's Medicaid or other parts of benefits package, is that a political risk for the Republican Party in the midterm elections coming up?

Yes, because this is a different Republican electorate. President Trump has changed the Republican electorate over his three election cycles as a Republican nominee for president. This is a middle and lower class Americans are receiving Medicaid benefits through Obamacare.

So let's rewind to 2017. One of the signature first bills of that Trump administration was repealing Obamacare. This bill was just passed by Republican, full Republican control of the House and the Senate, enshrines Obamacare for another generation.

And that's the clear piece. Patrick McHenry with us, contributor to Bloomberg. We're thrilled he could be with us with his public service to the nation from the Carolinas. Patrick, there have been a couple wonderful studies spanning from 2009 to the present day of the arch shift of the Democrats now representing elite, privileged East and West Coast constituencies and the Republicans much more the poor.

What does Medicaid cuts do to the people of your district in the Carolinas? - Well, the truth is it will not do much. It will not do much at all. There's been this political talking point that this is gonna devastate the Medicaid population. It will not. - Why? - Well, because work requirements are just a basic element of proof of eligibility.

And what you'll do, what we'll have with work requirements is some population, some significant piece of the population that is receiving Medicaid benefits and not working will go get jobs.

And so the idea that this is going to devastate the population is not true, number one. Number two, it will shift to the action of the state legislatures where they're going to have to come up with paying for us for themselves rather than drawing down gaming federal dollars. For example, the provider tax. States have figured out how to rig a system by which they tax hospitals –

and then give them more money than the taxes they impose by drawing down federal taxpayer dollars.

So it is a scheme and is a tax scheme that the Republican legislatures and Democratic legislatures in particular are using. So this will shift down. I don't think there's going to be much harm to this population, but it will be a huge political talking point in the midterm election. I would love your opinion on this. And, you know, we're getting a GOP line for you, but that's fine. Patrick McHenry, just to give pause, have you been surprised?

by Paul, which I'm going to editorialize an anemic Democratic Party response. Patrick, where are the Democrats?

They're searching. They're searching for a message. Yeah, but I don't mean to cut you off, but I clearly remember Richard Nixon getting run over in California. And Nixon picked himself up, whatever you think about Richard Nixon, folks. And he went dinner to dinner, rubber chicken to rubber chicken lunch to rebuild the Republican Party in the 60s. Where are the Democrats doing a Nixon redux?

they're raising money online rather than actually going and working the base and developing a new message for their party and understanding they just got hammered in the presidential election with no message. It was all vibes, but no substance. So they've got to do some soul searching and they can't just say, "No kings." I don't even know what that means, by the way. And the average voter knows less about what the heck that message means.

They need something other than we're not Trump. They need substance here about what they're going to do for America, and they're yet to do that. I think Hakeem Jeffries, I think you see leaders in the U.S. House that are much more keen to do that than what we've seen out of the Senate Democratic leadership that's been around for a decade and a half with the same message.

Patrick, President Trump is on a tremendous winning streak in many parts of his administration, his platform. What's next for President Trump and his administration, do you think? Well, next up legislatively is a crypto bill, and that'll be the stablecoin bill that the Senate passed a month ago. And there's a public pledge that they'll work that through the House,

and pass it to the president's desk in the month of July. And then they'll turn their work to the market structure bill for digital assets. And think of the market structure bills like a 33 and 34 act for securities and brings huge clarity to the crypto market through a market structure bill. But those,

That first bill, the stablecoin bill, will be at the president's desk in July, and implementation will follow there. And then the larger piece for crypto will come in the early fall. Those are the next legislative items. I think what you're going to see the president do is sign this bill and then start rolling out pieces of policy that come from this bill. Defense buildup is one. I think you'll see the president take significant action on artificial intelligence in our competition with China.

Those things will come to the fore in major ways. We're out of time. We're going to have to leave it there. But Patrick May, Henry, thank you so much. The former House Speaker pro tempore, current advisory board member for BGR. This is the Bloomberg Surveillance Podcast. Listen live each weekday starting at 7 a.m. Eastern on Apple Podcasts.

carplay and android auto with the bloomberg business app you can also listen live on amazon alexa from our flagship new york station just say alexa play bloomberg 11 30. wendy schiller joins us professor of civics brown university of course with all her work uh with their taubman at the center wendy's it's just another big piece of legislation or is there a new new as mr jeffrey speaks in washington

Well, I mean, I think nobody should be surprised that the House and Senate GOP passed the tax cut. I mean, yes, Trump will claim victory for this bill. He did get active. He put himself on the line. He went up to the Hill. He lobbied. He threatened. But Republican administrations, Republicans cut taxes. We've seen this all the way going back to Ronald Reagan. And they've also increased deficits.

And even though that can sometimes cost them politically, it has not traditionally cost them politically. So it's not surprising. And, you know, Americans think ahead to next week. In fact, most of America is thinking ahead to tomorrow. What is the holiday going to be? What's the weather going to be? Nobody's thinking 10 years from now, the deficit will be an additional $3 trillion. Is Trump threatened the same as LBJ threatened from another time and place?

You know, the real difference, I think, is that the Republican Party on the face of it, particularly in the House, seems immune or not as interested in local projects, local district flow of money. The federal government, as we've seen with Doge, Noge, these cuts,

it is enormously embedded and even under johnson it had a lot of resources to deliver and every congress person was interested in those resources these republicans don't seem to be worried about going back to their districts in fact the opposite and saying we're not taking money from the federal government we're not going to try to make a deal just to increase the flow of money to our district we want to cut spending so this

party is quite different from either the Republican or the Democratic conservative party that Johnson dealt with. Their political incentives don't seem to be the same. We are looking at Hakeem Jeffries right now speaking in the Capitol here, but it kind of goes back to a question Tom asked earlier this morning. Where are the Democrats? Where is the message? Where is the pushback on just a day-to-day basis that doesn't seem to be any check on this president? Well, it

It's an odd thing for the Democrats to be saying we're worried about the deficit. It's not usually what the Democratic Party says. It says we need to spend government money to help people who need a little assistance or a lot of assistance. And the Medicaid cuts are sticking in public approval ratings, right? So this bill is underwater with the public administration.

the moment but the the original trump tax cut bill was also underwater with the public uh the democrats did well in 2018 and covet interrupted the 2020 election so we don't know what the political impact of that bill was but it was also underwater when it passed

So, you know, the Democrats, you know, to say we have to get worried about cuts that will happen literally two and a half years from now, that's a hard sell. So the Republicans know that. And they also scheduled the worst Medicaid cuts, if you're thinking about people who might not be eligible any longer, for after the 26 midterms.

So it is going to be difficult for the Democrats to make this case, no matter how magical communicator you're looking for in the Democrat Party. Wendy, Patrick McHenry was just a Republican from the Carolinas, contributor to Bloomberg. And I asked him about the Medicaid cuts, and he said the incentive of getting people to work will make the draconian cuts less draconian.

Is that just Republican happy talk? Or does it actually work that you say you're not getting your Medicaid unless you find a job? Does that work?

- Well, so to be clear, you have to look for a job. I think that's the language. I have to double check because nobody can guarantee getting a job, but you have to at least actively be seeking work. And that's important, I think, for the constituency that is now shifted to the Republican Party. Remember, FDR, as you well know, Tom, you could give me the litany of programs that FDR created in the New Deal, all of them required something of the recipient.

And Bill Clinton reformed welfare. Let's not forget the Democrats took AFDC and they made it TANF, and that limited the amount of time you could be on welfare. That's what the Democrats did in the '90s. And it ended up not being as destructive as people thought it could be. So this is what the Republicans are counting on, that in fact,

This won't cut 7 million people off the rolls. That, in fact, you have to go to school, you have to prove that you're a caretaker, or you have to look for work. And the majority of Americans, when they absorb that, will say, well, I work, so why shouldn't they? Wendy, typically the midterm elections are a challenge for the incumbent administration. Maybe the opposition party gets some traction here. Is that the expectation for this midterm? Because it seemed like this...

President, this administration has almost unparalleled momentum here.

Yeah, well, you know, presidents in their second term, they don't always worry about the fate of their party in that second midterm. It's not really on their mind. And as far as we know, at the moment, the Constitution is holding and President Trump cannot seek and is not seeking to be elected to a third term. So there isn't much in it for Trump to cooperate with Congress at all. And this, to me, is the lesson of what's going on this week, is that whatever leadership

leverage Congress had with Trump is gone, evaporated, which means that the institution, even though it hasn't really been a check on the president as of yet, will have no power to check the executive branch. And the courts have been, I think, split in terms of supporting Trump and opposing Trump. So that is the concern, is that where's the leverage for Congress, not just where the Democrats are, but where's the leverage for Congress in this system? And what you have to worry about, I think, if you're the Republicans,

is the future of the party. There are many, we can have a long conversation about how many Republicans are gonna line up to run for president in '28, or much less governor or senator in '26.

And if they suffer because of this bill, that weakens the Republican Party going into 28. And that's what I think people have to figure out how to manage under a president who's probably not going to be concerned about that. Professor Schiller, thank you so much. Wendy Schiller, Brown University there. For enterprise organizations, managing all your food needs is a tall order.

Thank you.

Let's talk about.

some other decliners. It's your short audio report on the day's winners and losers in the stock market. Second biggest driver in terms of points for the S&P 500. Subscribe to the Stock Movers Report on Apple Podcasts, Spotify, or wherever you listen.

Join us in Seattle, July 14th and 15th for Bloomberg Green, two days of powerful conversations and meaningful connections. We'll explore what's next in the climate economy, clean tech, policy, and greener living. Featured speakers include Jane Fonda, Brian Gellert, and Vinod Khosla. The title sponsor is Amazon. Official airlines are Alaska and Hawaiian Airlines. Learn more at BloombergLive.com slash GreenSeattle. That's BloombergLive.com slash GreenSeattle.

This is the Bloomberg Surveillance Podcast. Listen live each weekday starting at 7 a.m. Eastern on Apple CarPlay and Android Auto with the Bloomberg Business app. You can also watch us live every weekday on YouTube and always on the Bloomberg Terminal. Joining us now, thank you so much for coming in. We're going to get her in here before. I mean, this lineup today, Tom, it's just one after the other. It's unbelievable.

And Rebecca Pattison to join us for their work at Bridgewater with Bessemer Trust years ago and JP Morgan joining us right now with a council on foreign relations. And it's sort of cool that you're with CFR because I've never seen a time where economics, finance, investment, international relations are all into one thing.

gelled ball. What's the way you think forward to clarity? Yeah. Well, good to see you. Happy faux Friday. You know, it is so complicated right now. There are so many cross currents with geopolitics, domestic policy, the feedback loop between financial markets, economics, and all these things. So getting clarity is not easy.

At the same time, I think there are some lessons we've learned. Even just looking back over the last 90 days from early April, I think we've learned that the U.S. exceptionalism is something we shouldn't take for granted. We saw that in the reaction in early April. I think we've seen that opportunities to invest are dynamic.

And they're relative. So think about Germany, right? The German stock market is up over 30% year to date versus the S&P, what, five. And growth in Germany is slower, right? The economy is not as robust and yet the market's doing better because of valuations and relative sentiment changes. So keeping that relativity in mind, I think is really important

There's a lot of lessons you can take away. And I think, Tom, that helps you as you go forward saying, what are my what are my truths? What do I know for sure? One thing I know for sure is that we're not done with tariffs. So this this oh, we have clarity on tariffs now. I think that's kind of silly. I want to point out that Mr. Jeffries of the Democratic Persuasion speaking since four fifty three a.m.

What did he say? He's taking his sweet time, right? He's still speaking in the House. We're trying to await a vote there. And also, Clea, thank you so much for this off of our desk. There are bomb threats and grounded flights in Ottawa and Montreal, Canada. That according to the FAA. We're monitoring that story right now.

And we'll leave it at that. Paul, was Rebecca Pattison commercial free? Absolutely. Rebecca, talk to us about your view of the U.S. dollar. We've seen a lot of risk assets bounce back, most notably U.S. equities. Yes. But we haven't seen the dollar come back. It's now down. The Bloomberg Dollar Index is down roughly 10% off of its

highs earlier in the year. What do you make of that? Yeah, I think there's two things going on. One is relative changes in U.S. yields. And even though the data today, the payroll data today was better than expected and we saw a little bounce in yields, a bounce in the dollar, the bigger story is when you compare January to now, wherever you're looking on the curve or even Fed funds expectations, it's lower. So that's a piece of it. But the more important structural piece of it, which I think has legs going through this year, is investors globally are

thinking about how much risk premium should be in U.S. assets. And so they're doing one of two things. They're either reducing U.S. assets in favor of other countries or commodities, or they're hedging their dollar risk. So maybe I want to keep my U.S. tech exposure for structural reasons, but I don't want to have that dollar risk, so I hedge it out. Both of those things are contributing to the weaker dollar. Is that something, I don't know, can we call it a

bearish market for the US dollar or is this kind of a trading thing? Well, the Fed part of it is a trading thing, to use your language. The reallocation is a slow bleed. It's something that's going to take time. If I am a major sovereign wealth fund or pension fund, I do analysis, then I go to my

quarterly board meeting and get approval. And then I roll out my new plan over the next few months. So this dollar unwind, if you will, is not something that's finished or quick. It's going to take months or quarters. But what is a stronger Euro? Just as one example, what does it do to Christine Lagarde's lunch? I mean...

If you get out over 120 on Euro, I'm sorry, that begins doing pinch Mercedes sales, right? Yeah. And they said that earlier this week at the Central Bank conference in Portugal they have every year. Excuse me, were you there? Sadly, no. Everyone was there but us. I know, I know. I was in Italy last week, but we're not going to go there right now. I wrote Francine a note. She killed hurting five of those people. That's awesome. Francine was rude for the first time I've ever seen her.

Anyway, 120, they're drawing a very light pencil line in the sand on 120 for euro-dollar exchange rate. I think it'll depend how quickly it gets there, what the economic backdrop is when it gets there. But they do have some limited tolerance. And we're seeing that everywhere, right? Switzerland taking interest rates to zero to try to limit Swiss franc strength. Taiwan, Hong Kong, lots of intervention.

I don't think we're looking at a currency crisis around the corner, but I do think we have to keep our eyes open that this could turn into something. Well, because I knew you were showing up. I did trade with Swiss franc and it's up 78 percent. Swiss franc strength, 78 percent. And I think it's 20.

years. It's a log linear moonshot as well. Is there a leverage destabilization behind these moves in currency? So there's one story that I think would be good for people to read with their lobster roll this weekend. My colleague at CFR, Brad Setzer, published a piece yesterday on balance of payments looking at the Asian currencies and what he calls a reverse Asian financial crisis risk.

I have not had the chance yet to read this piece. I just read the top of it. But the idea is that a lot of these currents have become very undervalued. And if they have to revalue and everything that comes with that, the owning of U.S. treasuries by Taiwan life insurers, et cetera, you could have global ripple effects across asset classes.

classes. So I think that would be useful reading for anyone who's thinking about contagion. I'll put this out on LinkedIn and Twitter, Censor's a giant. But Rebecca, with that, to walk through it,

you get reverse contagion in the Taiwan dollar strengthens, but Taiwanese life insurers own a boatload of American paper, which, am I right, goes price down, yield up, and they have balance sheet risk? That's exactly right. Are you okay there? That was perfect. And the whole point there is whatever the bond yield is doing this week or today, that's not the story. The story is over the next year as we get this slow shift in reallocation, and we're not going to get the supply.

with the big beautiful bill coming through probably till Q1 next year. But we are gonna have challenges to get demand to meet that new bond supply. And if we don't meet the supply, yields are gonna be biased higher.

Gold, it's been such an incredible story here. I mean, A, what do you make of it? And B, what do you do from here, I guess? I'm staying long gold. I have been for two years. And I've been there because of central bank diversification, which also is one of those things that plays out very slowly. Central bankers don't move fast anymore.

So this is something that I think will have legs as they diversify their allocations. And then looking for the retail consumer also maybe a little more nervous about bonds having the same degree of diversification benefit they've had in the past. Okay, I have very little gold. Maybe I'll have a 2% allocation or a 3% allocation. You get enough retail investors doing that, you've got another 500 bucks at least on the gold price.

We're coming up on Steve Myron out of Boston University and Harvard. Very controversial as a CEA head for President Trump. Matt Miller will be doing this interview. Rebecca Patterson, with immense respect for your career, he's controversial.

Explain why Steve Myron is controversial. Well, he produced a paper last November before he became head of the Council of Economic Advisers that people now refer to as the Mar-a-Lago Accord. And basically, a lot of the discussion in that paper is happening. So they wanted a weaker dollar, check. They wanted tariffs, check.

They want to get countries to pay for the protection of U.S. military. I think to a degree we're seeing that. NATO increasing how much they're paying, et cetera. People buying more U.S. weapons.

The piece of it that's controversial is that I don't think will happen is trying to get central banks overseas to continue owning U.S. bonds, but switch out what they hold today, which is very short term. It's a longer term duration. We're talking about 100 year bonds and then hold it because that would lower the cost of us servicing our debt. So we would U.S. would benefit. I don't think that's going to happen.

If it doesn't happen, the fallback in the paper is to look at capital taxes, which was in the big, beautiful bill until Besson had it removed. At the G7 meeting. But the possibility of a capital tax to try to get foreigners to play ball with the United States on various policy goals, I think, is still a possibility we need to keep our eyes open for. So your call, to summarize here, your call on weak dollars,

the trends in place? Yes, I believe so. It's not going to be every day, but I think over the next- About one year or two years, about two years. A year from now, we're going to be talking and we're going to have a weaker dollar and higher gold prices from here. And unless we have a recession, I think we'll also have higher yields. We're down to a countdown to Stephen Meyer in here off of this jobs report with futures up six, now up 12.

and the yield space a higher yield. It was a solid report versus some of the gloom that was noted. We also note that it's Fourth of July weekend, and our key polling here at Team Surveillance is cold or warm lobster roll. Ms. Patterson, please. All lobster roll is good as long as there's butter and lemon for me. And I'm a white Bordeaux with my lobster roll. Oh, solid pairing there. Nothing to argue about there.

White Bordeaux. The control arm, are you having white Bordeaux right now? They don't know what white Bordeaux is. It's really yummy. Sorry, guys. That's all you need to know. It's good. White Bordeaux. We'll try that this weekend. Rebecca Patterson, thank you so much for coming in. Thanks for having me. To our studios here on Jobs Day. This is the Bloomberg Surveillance Podcast. Listen live each weekday starting at 7 a.m. Eastern on Apple CarPlay and Android Up.

with the Bloomberg Business app. You can also listen live on Amazon Alexa from our flagship New York station. Just say, Alexa, play Bloomberg 1130. Shalane Shulteva canceling her trip to the Jersey Shore with the conference board and their economists off of our labor economy. A lot of emails in, Shalane, from good people helping, saying this jobs report is not as sprightly as it appears. Do you agree?

I totally agree. Well, I'm in Long Island, actually, Tom, and not far from Jones Beach. So maybe after we'll finish that, we'll just go there.

I think it's a Goldilocks kind of report, which may allow the Fed to cut rates in the second half of the year, but not because the labor market is deteriorating, but because inflation may prove to be lower than we all expected after tariffs and all of that. So it would be a rate cut for a good reason, not for a bad reason requiring an emergency.

So, the unemployment rate declining actually removed the July rate cut off the table for sure. And we were not expecting one, by the way.

I think that the deceleration, continued deceleration in average hourly earnings is a good signal that services inflation will continue to decline and will at least partially offset expected increases in inflation. Dow up 202 points. The president will speak to Mr. Putin now scheduled at 10 a.m. Paul? Very good. Yelena, so when you dig underneath the layers here, is the

Labor market, I don't know, is it fair to say it's still solid? Is that a fair characterization or are there some worrisome trends? Solid, Goldilocks, fragile, equilibrium. These are all the terms that we've been using and I think that each one of them is relatively fair to use.

The labor market remains in equilibrium, right? The layoffs remain low. We saw the U2 unemployment rate declined this morning. So these are the unemployment rate that relates to new layoffs. So we see initial jobless claims not moving much.

But at the same time, underneath the hood, it's getting harder for people to find a job if they lose one. And this report shows a little bit of a pickup in recent months in those people who were employed

but now moving into the unemployment status. So if you look at the flows data, it's very subtle, but there is that kind of feeling that things are worsening a little bit under the hood. If I look at the average hourly earnings on a year-on-year basis, came in at 3.7%, a little bit lower than consensus, but still pretty darn solid. So it seems like

Wage growth is still solid, but I don't think it's inflationary. What do you think?

That's what Chair Powell has been telling us. The labor market is not a source of inflationary pressures. And I think this report shows exactly that. And that's why I think that will allow them to continue normalizing rates once they see those three employment reports and three inflation reports over the summer, well, starting with this one today.

Yelena, thank you so much. Yelena Shiloteva with us here. My first look on Trishill Published with the Conference Board through the longer weekend. This is the Bloomberg Surveillance Podcast, available on Apple, Spotify, and anywhere else you get your podcasts.

Listen live each weekday, 7 to 10 a.m. Eastern on Bloomberg.com, the iHeartRadio app, TuneIn, and the Bloomberg Business app. You can also watch us live every weekday on YouTube and always on the Bloomberg Terminal.

For enterprise organizations, managing all your food needs is a tall order. But with EasyCater, you get a single workplace food vendor with the tools and resources to make it easy, giving teams across your organization an easy way to order from a huge variety of restaurants, all on one platform. All while consolidating your corporate food spend so you can control costs, streamlining billing and payment, and simplifying reporting.

Let's talk about.

We'll be right back.

That's BloombergLive.com slash GreenSeattle.

Let's talk about.

We'll be right back.

Join us in Seattle, July 14th and 15th for Bloomberg Green, two days of powerful conversations and meaningful connections. We'll explore what's next in the climate economy, clean tech, policy, and greener living. Featured speakers include Jane Fonda, Brian Gellert, and Vinod Khosla. The title sponsor is Amazon. Official airlines are Alaska and Hawaiian Airlines. Learn more at BloombergLive.com slash GreenSeattle. That's BloombergLive.com slash GreenSeattle.

This is an iHeart Podcast.