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tv   Bloomberg Markets Americas  Bloomberg  October 8, 2021 10:00am-11:00am EDT

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the last thing we want is to initiate and deploy rules that cuts off a part of society from be able to go to work, being able to go to restaurant in new york city. what is the outreach like to minority groups? how receptive are they to things like a vaccine mandate. sec. walsh: there's no question we need to do more reach out. we saw that communities of color were disproportionately impacted by the virus, with higher rates of virus, and there is also distrust in the medical system, so we still have work to do. we are going to work with mayors around the country to continue to build that trust. jonathan: do you think there's a risk that they will be disproportionately hit by these rules? sec. walsh: i don't think anyone is going to be disproportionally hit by the rules. this rule is for every american that is not vaccinated that works for a company over 100 people, that the choice is going to be vaccination or testing. jonathan: i know it is a topic close to your heart, it is
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addiction. i want you to talk to us about addiction and the importance of tackling and helping people with that issue right now. a lot of people have fallen out of the workforce. we need to do more to help them get. over the last 18 months, a lot of people have fallen into some pretty messy traps. i am trying to understand from your perspective, what can we do to help them? sec. walsh: thank you for bringing this up. number one, i think reach out to people who are watching this today. you might have family or friends struggling with this now. reach out to them, offer your support to them. we need to try to continue to our investments in treatment. we can't let people isolate. the pandemic has caused a lot of havoc, and that is a perfect scenario for somebody struggling with a substance use disorder, i'll call his him -- disorder, alcoholism, or even depression. we seen overdose deaths in this country higher.
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because somebody is in recovery or coming back into a program, don't cut them off from employment. they need to get back on their feet, and you can be a big part of that. jonathan: thank you for that. i know it is a topic close to your heart. marty walsh, the u.s. secretary of labor, thank you very much. your equity market positive a little more than 0.1%. we were looking for 500,000. the range was as wide as ever, and i will leave you with that line from ellen zentner of morgan stanley. if economists were right, it was probably an accident. he economists once again were wrong. from new york city, thank you for choosing bloomberg av. this was -- bloomberg tv. this was "the countdown to the open." this is bloomberg. ♪
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>> from the financial centers of the world, this is "bloomberg markets," with alix steel and guy johnson. ♪ guy: friday the eighth of october. 3:05 in london, 10:05 in new york, 35 minutes into the trading day in the united states. from london, i'm guy johnson, with my cohost in new york, alix steel. let's talk about the market reacting to this payroll number. the payroll number was a disappointment. markets are drifting sideways on equities. i think everyone is trying to figure out whether this is a decent number in jay powell's book. is it enough? alix: it seemed like from what powell said, the bar is really low for them to not lay out any kind of paper timeline.
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take a look at the individual markets. it is wishy-washy. energy and financials leading the way. we have seen that as we rotate into those cyclical value names. obviously, energy helped yet again by brent. there's a fire at a natural gas plant in siberia, which going to have problem getting gas may be to china, which can disrupt the whole market. what i did want to point out is the 10 year yield, now up to basis points. the convexity trading, that is what we are going to want appearing. you may have to sell some of those mortgages because the refi market is going to tray louth -- going to trail off, and that could lead to more steepening of the curve. i wonder how much of that is about what is happening in the u.k. front yields here are very anchored, back end yields not. guy: absolutely. there's plenty to drive the inflationary narrative in the u.k., and certainly governor of
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the bank of england has been talking about that, and his new chief economist has been talking about that. but the payroll figure is front and center today. it says on the screen in front of me it was a dismal number. was it really a dismal number? what we know about the u.s. economy at the moment is there's a huge amount of demand for jobs. why isn't the supply side of the labor market filling those jobs in? many questions need to be asked. bloomberg's international economics and policy correspondent mike mckee has had a little while now to dig into the details to form a picture. what do you think the fed things about the data it now has? michael: i have to tell you, i have no idea. where have all the workers gone? why are they not coming back to work? is it the delta variant? are they going to come back this month? we won't know when the fed next meets. 194,000 jobs created or get the headline definitely a
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disappointment. we did see a big revision up to the august and july numbers, so we are seeing more people at work than the headline would have you figure, but it is still not what people were expecting. on the other hand, this is not what people were expecting, a drop before printed present -- a drop to 4.8%. the labor force shrank during the month, unusual, especially since the long-term benefits ended early in the month. you would think some of those people would be looking for work, even if they didn't find jobs yet. these two numbers. 61 point 6% is the participation rate for the month of september. the problem is it needs to go up , not down. it was forecast to go up. we did see a 4.6% rise in average hourly earnings, which is largely compositional because it appears the people who have had low-quality jobs with very small the compared to others.
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here is the question we are asking. where have all the workers gone? here's the latest changes. we will go through this first get state and local education, 160,000 jobs lost. that's because the labor department says not as many teachers were hired, not as many employees in education, but they say it is a seasonal adjustment problem because of last year, when nobody was at work in the schools. there were actually one million people who were hired during the month or who came back to work onto school payrolls, and it shows up as a seasonal decline. automobiles and parts, because they can't get the chips for cars, we have seen factories closed down, so they lost some jobs. airlines coming back as tourism has picked up and airlines are trying to re-staff. health care lost 17,500 jobs. that is unusual, except that maybe vaccines and mask mandates
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caused people to leave. help wanted, this is the participation rate that we were talking about earlier, the decline. this is the employment to population ratio. the participation rate goes down because a lot of these people aren't looking for work now. why is that? that is the question everyone is asking today. alix: i ask where all the women have gone because a lot of them have also left the workforce. mike mckee, thanks a lot. it's a look at the jobs number. what does it mean for the fed and for the right market? ira jersey joins us now. say the word, convexity. ira: i apologize for my dog in the background. she was obviously not happy with the payrolls report either. at the end of the day, we are hitting some pretty important technical levels, regardless if we do have mortgage second --
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mortgage selling. we haven't seen any big buying of puts on yields yet, so until we start to see that, i suspect we will meander here under 1.7%, but 1.71% is the next key number to look at because we just broke above a pretty important near-term technical level. guy: oil moving higher as well. you want to be paying attention to what is happening in the energy story. we certainly are over here in europe. thank you very much, indeed. it really depends on the reaction for the fed. let's take a look at how equities are playing all of this. equities drifting sideways. trying to figure out exact it
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with this all means. abigail doolittle dealing with the details. abigail: sideways indeed. you could make the case this is much ado about nothing, or even that goldilocks scenario. you do have the s&p 500 higher about 0.1%. markets may be telling us that even though this is a headline miss, the report itself up ever so slightly on the week as well. it does tell you that market participants, traders think that the fed will be on pace for a taper, but some are calling it a dovish taper, so it is ok for stocks, ok for bonds.
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it is the highest level since 2014. that is certainly risk gone and a strong indication of the economy. old up 0.4 -- gold up 0.4%. if we take a look at a year-to-date chart of the value and and the growth index, we see that they are basically, despite the fact that we had huge gaps, they are both up. it is a goldilocks year for these two styles, sort of putting the debate, i don't want to say to an end, but it suggests that managers are favoring both growth and value. alix: that is 18 a trade, there is no -- that is a tina trade, there is no alternative. moments ago, u.s. secretary of labor marty walsh shared his insights into these jobs numbers. sec. walsh: it is about the
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pandemic. this is a worldwide issue with the participation rate in the workforce. clearly people are concerned about go to variant and concerned about their health, and a lot of people are reevaluating their work-life balance and changing their careers. alix: joining us is elise gould, economic policy institute senior economist. what gets that up? elise: i think the truth is, as he stated, we are still in the middle of a pandemic. we saw a fivefold increase in caseloads between july and august. that expand a lot of that slow we saw in august that many people didn't expect. think the pandemic is playing a much larger role there. we saw it continue to rise into early september, and the reference week we are looking at in today's jobs report was about the same in terms of caseloads
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as it was in august, so people are concerned, and rightly so, concerned about their health and maybe not coming back in yet. guy: i want to ask the question asked at the top of the show. where have all the women gone? the labor force has seen women leaving in significantly higher numbers than men during this pandemic. they are not coming back at the moment. do we need to see a more stable school story before that happens? elise: that is definitely part of the picture. we saw many students go back to in person learning. we saw schools across the country opening for five day a week in person, no longer doing the hybrid, doing in person learning. so i would hope in coming months, if we see that stabilize , but may be some hope that women will be able to enter, but that doesn't necessarily speak to any concerns about being able to fund childcare for those who
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may be caring for older family numbers who may have gotten sick in the last year. alix: what is the impact on the wage picture? that is going to be the inflation pastor. if you wind up having tentative women coming back into the labor force, we don't have a clear picture on that. how do we know what wages are going to do? elise: i think wages is still basically a composition story. it is still, when we look at wages, economy wide wages, a lot of wages did go up between 2019 and 2020, and that is because the bottom dropped out of the labor market. we may be seeing wage growth actually slowing as more lower wage, lower our jobs returned to -- lower hour jobs returned to the labor market. so many of those that were hurt the most, so many low-wage jobs, low hour jobs is what is missing in today's economy. guy: we don't know when these
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people are going to come back. we don't know what is going on here at the moment. how difficult, therefore, is the job of the fed? it is trying to figure out where full employment is. i have no clue. can you help me? elise: well, the unemployment rate is one indicator, but i think the participation rate has to be increased substantially. there are many more people hurt in today's economy than are reflected in the official unemployment rates. black workers have much higher unemployment rates, hispanic workers much higher. we need to be looking at many different measures before we can really measure what the recovery is looking like. alix: clearly it is really hard to be an economist right now. the rhetoric seems to be this isn't enough to throw off a fed taper. just look at what is happening with the curve. do we get different kinds of linkages now? are there going to be more caveats into some kind of statement that is introducing tapering? elise: i still think the
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pandemic is playing an outsized role here, and we need to be paying attention to that. i do feel like i am ticking the backseat to what the health experts out there need to be telling us what to do to make sure people can still remain safe and that we are paying attention to that moving forwards. i think that is still our number one concern as people return to work. guy:'s monetary policy having any effect on the labor market at the moment? is what the fed is doing useful right now? the question they've got to ask is whether or not they should start tapering right now. ultimately we are moving towards rate hikes, but do you think there is still a need for the fed to continue to support this labor market? elise: absolutely, this labor market is still down millions of jobs from where we were in february 2020. you look at the pre-pandemic is rates, it is more like an 8 million shortfall, maybe a 6 million shortfall if you just look at population growth. we are far from a full
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employment economy. we need to continue moving forward in meeting this economy as possible. alix: if we get a $1.2 trillion interest or plan, will that help? elise: it will continue putting pressure to ensure that we get a stronger economy that works for everyone, so i think it is an important investment. we talk about women's labor force participation. many of these investments will help support and bolster women's labor force participation and help the economy overall. guy: in terms of how this is breaking down, we are trying to get an understanding of the various components. we know that the labor market has many openings. how many of the people that are not in the labor market at the moment have gone permanently, and how many do you think are still potentially going to come back? is there any way of figuring that out right now?
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we here analysts talk about the fact that people have retired permanently from the labor market may be earlier than they would have originally. what can we do to figure out what those numbers in those two buckets look like? elise: that is a great question. it happened in the aftermath of the great recession. people thought there was going to be this structurally higher unemployment. going forward, we would have lower per dissipation in the labor force, and eventually, those people came back. they were not missing forever. they were not playing video games. they were not necessarily retired. they wanted to come back to the labor force. i think is the economy picks up, some of these jobs become better, one of the things we also saw was a slowdown in wage growth, particularly when we look at something like leisure and hospitality, were some employers have provided anecdotal evidence of shortages. if using there should be shortages, you should be seeing faster wage growth, not a slowdown in wage growth. alix: it really fascinating
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conversation. thanks very much, elise gould of the economic policy institute. don't know about you, but anecdotally, i talk to people from different industries across the board, and people are really sicking about changing careers, doing a hybrid kind of career. the pandemic really shifted different priorities, and i am talking people who work in fbi to people in tv. this is across the board. guy: that is quite the switch. [laughter] alix: i mean, i know people in the fbi and in tv guy: oh right. i was sinking about going from the fbi to tv, which would become unless you are going via some sort of fbi seemed show, quite a big jump. we digress down a crazy rabbit hole. i think what is going on here is that a lot of people are still worried about the virus. i think a lot of people, as you say, are trying to figure out what their choices are. i think a lot of people that
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have benefits may be still have some of those benefits. the saving rate is still relatively high. that maybe gives people a little bit more of a cushion to take time to make that decision. this is maybe not working out as quickly as we thought it would. people all coming back. people are taking the time. alix: and can the fed actually fix that? i don't know. guy: that is tough for monetary polly, isn't it? -- monetary policy, isn't it?
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♪ ritika: it is time for the bloomberg business flash. i'm ritika gupta. quarterly sales at taiwan semiconductor manufacturing jumped to a record. that underscores how the world's largest contract chip acre is benefiting from the global shortage of a product that powers everything from cars to smartphones. third-quarter revenue was in line with estimates in september sales were 20% higher than a
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year ago. the crypto community has been waiting for years for a u.s. bitcoin etf. now there could be as many as four of them in a matter of weeks. this month, the sec will again review applications for etf's. they all follow a format that could be received favorably. that is your latest business flash. guy: thank you very much, indeed. it is etf friday. here with the largest weekly outflows, bloomberg's dave wilson. david: thanks, guy. you've got the usual suspect leading the parade come of the s&p 500 spiders with the outflows. beyond that, you see select sector spiders for health care and industrial companies at the top of the list, along with a 20 plus year treasury. beyond that, what is interesting is what is happening in terms of
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leveraged products, you might say. you have volatility shares coming out with a couple of exchange traded notes that track velocity shares from credit suisse. they kinda blew up in the last few years, and one of them only trades at the counter -- trades over the counter at this point. everything that was old is new again. alix: i feel like that as a reference. guy: that make me feel a lot better, before you get that dive in. alix: i already got it in. we just did it at the same time. also, take a look at what is happening in the gasoline natural gas market. coming up, we will break down some edge visual stock names and look ahead to earnings with sarah hunt. this is bloomberg. ♪
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the comfortable way to work out. -that looks fun actually. -it looks fun? it looks comfortable and fun. it looks like something i would put by the pool -or something. -looks like a paisley. -hey, a paisley, we'll take it. -yeah. oh my god, i could do this and watch tv at the same time. -exactly! how do you feel? -it feels good. feel my heart racing a little bit, ya know, gotta catch my breath a little bit, but it's good. oh yeah, i can definitely feel it. fantastic. oh yeah, i can do this. this is easy. yeah, that feels great and definitely better than the floor.
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treadmills, you've seen the bikes with clothes hanging on them, but people don't use it. what's the point? the aerotrainer, people want to use it. -wow, this is easy! -absolutely! it feels good. it feels sexy. i love this, aerotrainer, i want one. i like this. like, i can do this. i want this in my house. (host) wondering if the aerotrainer is tough? you bet it is. (upbeat music) ♪ (engine revving)
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alix: live from new york, i'm alix steel, with guy johnson in london you disses "bloomberg markets -- in london.
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this is "bloomberg markets." abigail doolittle, it has been one crazy week for the likes of energy and financials. abigail: it has been one crazy week. the s&p 500 higher on the week relative to energy, and that has every thing to do with oil. oil touching above $80 a barrel for the first time since 2014, up for a seventh week in a row. yields also up for the seventh week in a row. we've had bonds selling off for seven weeks in a row, helping the financials be the second-best, up 2.2%. utilities also one of the top sectors, up 7.1%, interesting because you don't typically have both financials and utilities climbing at the same time. those higher yields make utility dividends look less attractive, so that is something to keep in mind. some sectors going for defense. take a look at the industrials. that is solid, up 1.6%. one of the big questions on the year beyond the growth value
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question, big cap or small cap? even though there have been some big divergences on the year, at this point we have pretty solid gains for big cap i'm of the s&p 500 up $.70 on the year, small-cap, the russell 2000, despite the recent weakness, up about 14%. lots of solid gains for large-cap and small-cap stocks. there's reason to think that stocks may rebound a little bit from the recent volatility. what we are looking at here is a very busy chart, but what we are looking at in white is the put call volume on the s&p 500 in blue. the five-day average on the s&p 500 really normalizing every thing out. you can see that call has been coming down, that volume, telling you that less people are hedging or buying bearish puts on the s&p 500 then had been the case. this is the s&p 500 five day moving average moving up, suggesting there will be some more upside ahead. guy: one of the reasons they may
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not be buying puts is because they are expensive. you just take a look at what is happening in terms of pricing, trying to hedge the downside. it is a tough ask at the moment. you wonder whether or not that pricing story is just keeping people out of the market in terms of where they would like to be. they are a bit worried. they would okta by some puts. there are other ways of doing it. we talked to annise tish pond -- to an ace tish pond -- to anish deshpande earlier in the week about this. alix: what i find so interesting is the market signal is for producers to go and pump more oil. i really don't think they are going to do that, at least not the public layer's. guy: at some point, we are not talking about large investment.
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if you can put a few extra rigs to work, you can get the labor. isn't there a massive opportunity? alix: maybe the private guys will do that. but labor is still an issue. input costs are also rising. from that angle, it is going to hurt a little bit. until shareholders one them to, they are not going to do it. maybe on the margin or incrementally, but i can't see someone coming in and saying we are going to add a lot more rigs because of this because certain shareholders will not like it. guy: what i find interesting at the moment is this potentially is an under owned area because a lot of people with their esg mandates can't put as much money to work here. it is interesting to see who ultimately is making hey on this story. maybe it is the hedge fund community. a be wider shareholders are not going to pick up some of the benefit. obviously they're going to see, the fact that shares are going higher. it will be interesting to see whether or not this discipline sticks.
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let's talk about what else is going on here. sarah hunt, alpine >> portfolio manager, i'm sure she has a few things to say about the energy sector. let's start with the payroll numbers. we are trying to figure out what we want to do in this market. a lot of things feel macro driven at the moment. looking at data in the states that is not delivering quite what they would have thought, and as a result of which, this taper is in question. as an equity investor, what do you do with that? sarah: we have talked about this before, but it is clear the fed is trying to set up the taper from any tightening cycle. i think you could argue with where you see some of the inflation numbers and some of the other underlying things in the economy, but the taper is probably something they will go forward with at some point. it might be november. i think it is likely to say where they have signaled because you don't need them to be doing that so much right now. i think the question on the labor market has a lot to do
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with a combination of the delta variant, those big storms that went through, and that can affect some of the numbers. you've got some very strange seasonal adjustment because of what happened last year. i think there's a lot up in the air, and they are not going to have the data for october by november. the economy is not in such bad shape that it doesn't seem like getting rid of some of those emergency covert measures at this point is probably not a bad idea, so they are being very careful to make sure they don't think that that signal is going to start a tightening cycle. alix: that part of it, separating the taper from the hike, is anchoring that front end, while the backend really rises. i'm wondering how much more juice you think is left in the financial trade. sarah: i think the financials have been under pressure for some time, so i think there is some room in the financial trade. a lot of those companies have done a very good job in the interim of living off of different things beside net interest margins.
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you have seen a lot of different fee structures, a lot going on while we have been living in a world of zero interest rates. so the fact that you might get little more room for them on the interest rate curve i think is a benefit to them, and i think the underlying things they have done before that happened are going to continue. i think the financials do have some space here. guy: financials up, tech down. is that the narrative, or is a little more nuanced? sarah: i think tech down with higher interest rates affects more the big mega caps than anything else. i tend to question whether or not that correlation really should exist because you do still have growth across even the mega cap tech stocks. but i think the underlying situation is not going to get worse. you were just talking about semiconductors and how much they feed into everything we do. the cycles on that are very different than they used to be, and the cycles on technology are different than the used to be. they used to be driven by individual components like laptops and cell phones. now you've got everything with semiconductor content in it.
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i don't think the tech sector is going to be is negatively affected by interest rates as people are concerned, but it would believe that there is a knee-jerk reaction as rates go higher for people to stay away from that sector. so i do think there is some trade-off, but i don't know that longer-term it really exists in the same way. alix: sorry for that noise. i literally dropped all my beverages in that moment. let's circle back to energy. you are looking at the best week since january of 2020 for the energy sector space. for so long, it felt like the energy stocks weren't keeping up with the actual oil price, and they are. do you want to be a buyer of energy stocks right now? why? sarah: you were just talking about the fact that a lot of people have an esg mandate that once them to stay away from oil. we have heard from our clients for the first time in the last year or two that that is something they are more interested in. we have places where we can put energy where we've got some hedge funds we can put energy into, and i think energy does
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have some legs here. you have seen a couple of years of underinvestment. the discussion you are having just prior to my joining, the question about whether or not banks or shareholders want to fund development, at least in the u.s. and in parts of europe, for company to go ahead and make those exploration commitments, is a really big question, and there is some short-term movement you can have. you can put some more land rigs to work. the larger off store shops, there's been very little investment on that side. the joke in the oil industry is that low prices solve the problem of low prices. so there's going to be some questions there. the move towards a more esg friendly energy development world can't go as fast as people would like it to go, so you are still going to have the underlying need for the hydrocarbons that people are trying to replace, and i think there has been a bit of a disconnect on the timing, so there has been underinvestment on the side of normal fossil
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fuels because people are expect there to be a quick catch-up from other sources, and i think right now that is really in question, at least in terms of the timing, not ultimately the goal. guy: so underinvestment in energy potentially leading to higher prices. we've got potential he underinvestment and other materials areas as well. it is interesting to ci and or popping back off of its recent lows. if we are heading into an inflationary environment, if we are going to see inflation picking up, maybe remaining a little bit more sticky, the labor market can't sort itself out, we've got supply shortages across the supply chains, higher potential raw material costs going into all of that as well, how do you want to position and that inflationary environment? you talked about financials. how do i want to position my portfolio if i think inflation is going to be with us for a while? sarah: to the extent that people who are at the latter part of
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the chain on the industrial side have a harder time pushing on prices, sometimes the earlier inputs, those prices can be higher, so i think there is some opportunity in the energy space. i think there's also some possibilities in the materials space. the real question is what is going to happen with the economy. to the extent that we were talking about technology stocks before, a lot of those stocks are now the chains that become more interesting because there is an ability to push price. as we start to see problems in the food industry, there are some underlying issues that are difficult to parse out. i think you've got a pretty good glide path for those just in terms of spending that has already been appropriated. i think there are areas on the tech space that are very good. i think there's areas in the health sector that are also good. so there are sectors that work fairly well, but it is trying to figure out who's got the most risk in terms of margins right now, and that will move as you
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start to see things change because it will start with raw materials and then go up the food chain, but right now there are places where you're going to get squeezed, and i think that is the tricky part going into the next 12 months. alix: sarah, it is always so fun to get you on. coming up, the other wildcard is what is happening in d.c. democrats kicking the u.s. debt ceiling talks down the road, along with republicans, for the next two months. what this means for bidens infrastructure agenda. that is next. this is bloomberg. ♪
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ritika: let's check in on the bloomberg first word news. i'm ritika gupta.
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for the second month in a row, the u.s. economy added fewer jobs than forecast. payrolls rose by 194,000 in september, the smallest advance this year. the on employment rate fell to 1.8%, partly resulting decline in the labor force. -- partly refunding a decline in the size of the labor force. the european union has been exploring joint action to ease the energy crisis. bloomberg has learned one of the proposals would have national governments jointly buying and storing natural gas to avoid future price shocks. gas and power prices have soared to records in recent weeks because of limited supply. democrats in congress have started to discuss how to make cuts in president biden's sweeping social spending bill. the president originally proposed a $3.5 trillion outline now he is willing to go down to 2 trillion dollars. democratic senator joe manchin said he could support only $1.5 trillion. maggiore leader chuck schumer is hoping a deal can be reached --
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majority leader chuck schumer is hoping a deal can be reached by the end of november. -- spoke to a panel hosted by bloomberg's francine lacqua. >> all g20 members should commit to the 2030 targets, the so-called ndc's, consistent with being net zero by mid century. some g20 countries have yet to do this, but many have. ritika: bezos also called on elimination of the internal combustion engine. global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm ritika gupta. this is bloomberg. alix: thanks so much. he also went on to say that we are going to have more jobs of higher quality during the energy transition, that consumers are going to have better products. i think the question becomes how long does it take for us to get to those better, higher quality jobs. there's obviously going to be a huge skill gap as you transition
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into this green energy future. how do you do that? are we going to miss out on a generation? how quickly do we have to invest in those workers to transition, and our people already doing that? guy: this is the problem, isn't it? you've got a series of gaps in this energy transition that we still haven't figured out. we don't have all the technology would necessarily need. we don't have the skilled labor force we necessarily need. i think what we are seeing in europe is maybe just the beginning of this process. it is going to be unbelievably bumpy. he's pointing at china as well, saying you've got to get on board, which is pretty interesting. but this mismatch in terms of aspirations and reality, i don't think anybody has quite yet fully figured out the ramifications of all of that. alix: and are we going to have in the meantime an environment where it is more inflationary, but maybe less productivity until we can flip that switch? which also leads us to the infrastructure bills in congress
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right now. the progressive have been like, no green, no deal. you need that kind of investment to help spur the sector. i don't know how big we are going to get it. guy: no, i don't think anybody knows at this point. if you actually take a step back and think about the range we are potential he spending, and i appreciate over a long period of time, but nevertheless, it is trillions of dollars. trillions of dollars in terms of how much money is ultimately going to be spent by the government. so it is certainly something worth paying attention to. janet yellen, the treasury secretary, was talking at that same event. i thought what she had to say was interesting as well. she talks about the fact that the u.s. is still, regardless, spending a lot of money here. other countries potentially could be definitely put front and center, thinking about maybe withdrawing some of that stimulus. she is pretty keen for everybody to continue.
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sec. yellen: u.s. economic recovery is intertwined with the global recovery. to this end, i have encouraged other major economies to continue strong support measures to sustain the recoveries. guy: everybody needs to continue to work hard to make sure the recovery is on track. the problem then is what do you do with that because we find ourselves in a situation where you could argue that we are now in an inflationary environment. does government need to continue , should government continue to spend money at this kind of scale? i know there are plenty of people in the states that are worried about that. if we end up unleashing inflation, that is going to be incredibly damaging. alix: that is where we are in the logjam over at congress. let's get more on that with emily wilkins, bloomberg government congressional reporter. we still have congress that
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needs to walk and chew gum at the same time. all of the different things are on the table. they need the budget resolution and the two bills. emily: the first deadline coming up is october 31. that is when speaker nancy pelosi has said she once to get to an agreement on president biden's reconciliation, that social welfare and tax plan. democrats are currently working on that, but they still have a long way to go. lots of questions of how much programs should be funded, whether they are going to try to look at a number of different issues or focus may be on a couple of key areas and try to get those right. that is around october 31. they could potentially go past that date as well. after that, the next big date is december 3. that is not only the date that congress is going to have to figure out how to lift the debt limit for potentially the long-term, but they are also going to have to figure out how
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to fund the government because if it doesn't happen by that point, there will be a shutdown. guy: let's talk about that debt ceiling story because there is increasingly this narrative that maybe the democrats will try to get rid of it forever and ultimately put this issue to bed. no other country really has these kinds of problems. if they were to try to do that, how would it work? emily: that is something you have heard from treasury secretary janet yellen, from house democratic majority leader steny hoyer, who have said we don't onto have to deal with this battle. there are a couple of different options for how they could do it. democrats have talked about ideas such as minting a $1 trillion coin. they have passed legislation that would require the treasury secretary to be the one to continue to raise the debt limit. so there is a potential proposal out there, that they could raise the debt limit to some number they are never going to reach.
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alix: it is possible. how do they do it? what is the procedure? emily: that is a really good question because the thing is, it would be hard to get republicans to go along with a lot of those ideas, when republicans have really been able to successfully leverage these debates over the debt ceiling to get their own priorities through as well. i think that is why at this point, you're just talking about a simple raise of the debt limit. if democrats do that through this reconciliation process, that means they don't need republicans. they are limited in what they can actually do. the reconciliation process is only for things that have a direct impact on federal spending and how money is spent. alix: emily, thanks a lot. really appreciate it. great reporting this week. this is bloomberg. ♪
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alix: every friday when guy and
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i are here, we both talk about our favorite chart of the week. here's mine. it is not a commodity, so sit down. it is sort of commodities, but ok. this is five-year five-year swaps for the eu, the u.s., and u.k. i have been really wondering what has been leading the jump in yields that have happened at the u.k. and why we haven't really seen the euro move that much. i think this chart really helps explain it. these inflation swaps are almost 4% in the u.k. in the u.s., we are over 2%. we are not even at 2% in europe. this is where we are seeing central-bank divergence. this is what is leading the right market and the fx market, and we can blame a lot of stuff this week on the debt ceiling, but i really think it is something like this charge that has led a lot of the market action we have seen. guy: you look at what is happening in the u.k., the gas crisis, what is happening more broadly in terms of labor shortages, brexit. you roll that altogether and it
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is certainly producing a fairly negative picture for the u.k. right now. potentially the bank of england has to tighten into weakness which is not something many central banks want to do. i completely and utterly this off from kit juckes' morning note from socgen. this is all him. what you've got here is the spread citibank surprise indices , between europe, the euro zone and the united states. the eurozone data has been going down. the surprise index has been falling. the u.s. has been going up. the euro has been tracking this closely. unless you get a sick move, kitt argues, the dollar is still -- a significant move, kit argues, the dollar is in charge. this is bloomberg. ♪ ♪
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>> the countdown is on in europe. this is "bloomberg markets:
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european close," with guy johnson and alix steel. ♪ guy: friday the eighth, 30 minutes of the close. european stocks just drifting as u.s. job growth disappoints for a second month in a row. the euro tracking a little bit higher, still around or below 1.16 against the dollar. ireland abandoning its 12.5% corporate tax rate, removing a major hurdle to an oecd deal that could deliver a minimum tax rate of 15% for global multinationals. we will talk about that in a moment. the eu is set to explore joint gas purchases and storage as weather forecasters worn that temperatures and wind speeds are set to drop in the near future. exports continue to china despite a major fire at a
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