tom: and understanding between iran and the west. details needed over the next 90 days. conservatives dem -- conservatives condemn the accord. israel worries of its survivor. -- survival. are we creating quality jobs? when will rages -- when will wages rise? with us, tony of pimco, later, jim glassman and bill gross. this "bloomberg surveillance." we are live.

it is friday, april 3. i am tom keene. not with me is michael mckee not with me is brendan greeley. with me she is such a trooper olivia sterns. olivia: the labor department report is due out. 12 straight months with games with at least 200,000 jobs. 20 years since that last happened. wall street will not be reacting today. the market is closed. after nine years, iran nuclear talks are heading into their final stage. terms of a plan to keep iran from building nuclear weapons. both sides say it is a historic step. >> it is not whether it meets all of the desires of one side at the expense of the other. the test is whether or not it

will leave the world safer. olivia: president obama must persuade congress to okay the deal. pres. obama: if we see something suspicious, we will inspect it. with this deal and ron will face more inspections than any other country in the world. if congress kills the deal without offering any reasonable alternatives, the united states will be blamed for the failure of diplomacy. olivia: the deal cuts into iran's bomb making capability. they have until the end of june

to finalize a plan. the deal is being greeted which years where sanctions have been crushing the economy. the campus massacre in kenya is the worst terrorist attack in 17 years. islamic militants attacked. they also states the 1998 bombing of the u.s. embassy. two new york city women accused of a homegrown terror plot. they discussed violent jihadist views with an officer. search of the houses turned up bomb making plans and materials. mike pence and asa hutchinson both signed updated bills on

thursday. critics said the original measures offered legal defense for businesses that refused to serve gays and lesbians. tom: a man lost at sea for 66 days is reuniting with his family thanks to fellow sailors. a cargo ship crews spotted him clinging to his sailboat about to her miles off the coast of north carolina. he survived by drinking rainwater and catching fish with a net. those are our top headlines. it is jobs day. the most interesting schedule we have. great guest coming up. we are honored to bring you alan krueger. given the fears over global liquidity, first, to peter cook.

first, a look at the history may last night. give us the level of euphoria over this transaction with enron -- with iran. peter: they feel very good the white house, about what they have achieved. it is clearly be big story. this is a big moment for this president. he invested a lot of time and energy and risk a lot -- and risked a lot with this deal. there is huge risk steel. there is a lot -- there is a huge risk still. tom: the new york times notes

--. there is a lot of specifics in this transaction. were you surprised by that? peter: the romney and test suggested not as specific as john kerry and the president did. i was not surprised. for the president to be able to sell this, the iranians needed to know he could provide specifics to members of congress. the united states needed those specifics. those other world leaders who were going to be at his side able to convince members of congress this is a good deal. tom: do you agree with that? olivia: it is not just about the u.s..

what you are referring to is the four pages of bullet points. everybody thought the talks were dragging on because there was no consensus. it is jobs day. we want to know what you are seeing in your report. peter: our forecast calls for 245,000 jobs to be in the report today. unemployment, 5.5%. the big question for janet, some wage pressure. we will see if it starts to show up.

we will see if we get it in this report. tom: thank you. peter will have a full report. alan krueger with us from princeton. tony, i want to get to you on the repo market. tony: we are not seeing wage growth because it is slow. -- because inflation is slow. we are starting to see wage pressures build. tom: anyone who follows me knows i cite alan krueger.

there is a part of america that is winning and a part that is not. do you see any change in the separation of two americas? tom: i think they are very far apart. over the last few years, they have stayed far apart. maybe with the job market getting tighter, we will see convergence. olivia: the headline number is at 5.5%. tony: there is a large number of people working part-time who would like to work full-time. if you look at work hours, they are growing and our back up to where they were before recession. there is not that much slack coming from work hours. the 5.5% unemployment rate is indicative of where the job

market is. olivia: you still think the fed is going to raise rates between june and september? tom: we do not want to put you on the spot. there are a lot of reasons why people have been revising their expectations. are we on track for the third quarter? tony: of course. janet yellen wants market persistence -- market participants to focus on the changes, which is to say, how fast will the fed move. tom: the unemployment rate -- we have never seen this.

guest: i wish the job market was not improving at such the rate. people were still digging out of the problems caused by the 2008 recession. anger: payroll growth -- guest: the market got used to figures in the high 100s. it is strong enough to keep the jobless rate on a downward track. olivia: even the wages -- guest: we have not seen the participation rate. there will be downward pressure

on the jobless rate. janet yellen said there was a substantial body of evidence that would say that is a good reason to think wages would rise. olivia: we will be here all morning. you do not want to go away. we are going to turn our focus back to iran. it looks like we finally have a deal. ♪

tom: good morning. a special editions of "bloomberg surveillance."

this is a joke. this is one alan krueger joined the administration and the other one that rate deteriorated. i put that in purple so you will not walk off the set. a massive improvement in the own improvement rate. how predictable is this? guest: it moves around all the time. it is a strong predictor of what is going to happen with wage growth. tom: he is here at the red line. the safe answer that you would expect. let's do a data check as you get ready. olivia knows what is open and what is not open. the dow closed yesterday.

currencies are trading. that will be the litmus paper for me. i will look at dollar yen. good morning. olivia: it is jobs day. let's get you top headlines. after nine years, a deal taking shape. john kerry and his counterpart revealed terms to keep iran from building nuclear weapons. it is a historic step, but not the final step. president obama must ok -- must get congress to okay the deal. a shooting -- 147 people were dead when it stopped. the gunmen belonged to an extremist group based in somalia. the copilot of a germanwings flight researched suicide

messages and -- the second data recorder that was found shows he increased the plane and's speed as a plunged into the mountains. senator menendez pled not guilty to bribery charges. samsung will make the main chip in apple's next iphone. hamstrung of getting the processor job. they lost the word to taiwan. robert schuller is dead. he gained fame preaching

christian gospel. one of the first u.s. mega-churches. it was the base of his evangelical empire. he was 88 years old. those are your top headlines. a landmark deal in switzerland. world leaders took her step to and a nuclear standoff with iran. >> i can tell you we have reached a solid foundation for the deal we are seeking. olivia: it does not commit either side to action. our guest has 12 years experience with the united nations. is this a good deal? guest : the deal, what we

have so far in terms of framework has cut off. that is a really big node of success. i have olivia: i heard the -- olivia: i have heard them say it is based not on trust, but on verification. guest: it is the most aggressive inspection regime. the oversight and investigators will be able to follow the entire supply chain of the uranium development from the minds all the way to the centrifuges. this is the first time we have seen something like this.

for the world powers, you see iran agreeing to a very low number of centrifuges. 19 thousand to 18,000, down to a floor of about 6000. that has to do with their capability to enrich. they're going to take it down to a number, the numbers are low. officials were surprised by that number. olivia: please, continue. guest: the third piece is the inspection regime. they are going to get all of it off at the same time. that would be a big win for iran.

olivia: let's talk about the fallout. i heard the president announced he is going to have a summit coming up later with various allies. what is going to be their reaction to this deal? guest: there is going to be a bit of specter's is him -- a bit of skepticism. one should not expect these countries to deal -- to welcome a deal with open arms. they're going to be nervous. it is important the president go forward with our allies and understand that just because we

are getting into this agreement does not mean we are going to let them off the hook in terms of bad behavior. tom: princeton with a heritage on game theory. i think about the phrase degrees of freedom. the complexity has so many players. is there such a thing as too many allies? too many countries together? guest: they can make negotiations difficult. it is very unusual in american history. it was very effective. tom: can you carry over to if sanctions were against iran will they work against ukraine?

guests: i think it ran was a special case. i think it is harder to isolate russia. we haven't seen much progress in terms of diplomacy. olivia: i think it is apple and oranges. talk to me about what happened this week. it looks like a rack beat back the islamic state with the help of shia militias. can iran be a military partner for us in the middle east? guest: what happens is interesting. you had shia militia go in with heavy support from the coalition. they made initial progress but then got bogged down. he got to the point or iraqi

security forces had to call back and get us involved. tom: it is jobs day. coming up jim glassman will join us and bill glass will join us and bill gross will join us. ♪

tom: we give you greetings on this good friday.

olivia: i would say spring has sprung. the pothole meter is off the chart. it is time for a morning must read. this is on the statistician out of france. olivia: it is a leading indicator. how the easter bunnies got just so watch. if you shop around, you can find an easter bunny for three dollars. you could buy about half a bunny today. minimum wage can buy you several bunnies. alan krueger, is this advance in technology and the consequential

off shoring for manufacturing is this what is keeping a list on wages? guest: we are seeing signs of food inflation. i think there is a limit to how much technology can reduce inflation. there are three main theories about why wages -- guest: companies do not feel like them money to pay. you look at profits as a share of gdp. there is an idea that janet yellen in the down term, since

wages are sticky, they did not go down when they should have the is of a contraction. perhaps this is a way of it adjusting. it may have a lot to do with that. it is the lack of decline. 85% of u.s. jobs are in the service sector. the cpi is up to .5%. there is a limit to how much globalization can influence u.s. prices. tom: i did the late late shopping last night. i come around a kiosk and there is michael mckee doing the same thing. getting bunnies, baskets, and chocolate. the dow, up 65. the 10 year yield, this is

important. sustained, under 2%. will we see bonds trade? olivia: we will. tom: watch the two year yield. 0.53%. olivia: good morning. it is jobs day. we hope you are watching. less than 90 minutes from now we will find out if the economy is on a winning streak. u.s. hiring is on a roll. 20 years since that last happened. wall street will not be reacting today. the market is closed. the bond market is open till noon. the framework for an iran nuclear deal is in place. benjamin netanyahu says it threatens his country's

existence. iran must hold up its end of the bargain. president obama: if iran cheeks -- cheats the world will know it. past efforts to open eyes this program will be addressed. iran will face more inspections than any other country in the world. if congress kills this deal without offering any reasonable alternative, the united states will be blamed for the failure. olivia: diplomats have a long to do list. they have until noon to finalize the lands. the deal is being greeted with cheers and iran. prices down across the board. the campus massacre in kenya is the worst terrorist attack in 17 years.

when the shooting stopped, 147 people were dead. the gunman belonged to an extremist group based in somalia. they staged the 1998 bombing of the u.s. embassy in nairobi. toyota seeing room for growth again. the automaker planning new factories that would end a three-year freeze. toyota will's then $1.25 billion. pope francis watched the feet -- washed the feet of 12 inmates. roman catholics are observing good friday today. those are your top headlines. still to come the gap between the wealthiest 1% and america's most improv wrist -- impoverished is growing.

everyone wants the answer to the question -- are we stuck in a 2% right? we will ask alan krueger.

tom: good morning. michael mckee is off today. we welcome you. our special jobs day coverage. there will be the minutia at 8:30. the reality of falling behind. inequality is a loaded phrase. with us, anthony crescenzi and alan krueger. professor quarter, you are a leader on this. what is the distinction between a more left view of any quality anymore right view of any quality?

if i got you and john taylor in the same room on any quality what would be the discussion? guests: the distinction is what should we be doing about it? there has been a convergence that any quality has increased dramatically and that is not good for the country. there is disagreement about what should be done about it. tom: what should be done now. unemployment was terrible and then it got better. within that, it has gotten a lot better. do you assume lower unemployment rate less any quality? guest: when the economy runs hot, the bottom does better. the only time we have seen a meaningful decline is in the late 1990's. there are many things government can do. raising minimum wage that is

lower now than it was when ronald reagan was in office. companies voluntarily raise their minimum wage. it is time for the government to make sure competitors are paying a fair wage. we could take steps to strengthen unions and representation of workers at work. we can invest in the long run in education. all of those steps will help. the forces causing any quality to rise are varied. partly globalization, partly technology, to partly a change in norms that work and make it acceptable to have an enormous diversions, -- to have enormous diversions. olivia: we have a great chart i saw yesterday. it comes from the bureau of labor statistics. income from the highest earning

20% of americans. is this a problem for gdp? and guest: think about what happens after the crisis. a million americans lost jobs. the odds of the construction worker getting their jobs back -- what did america do to help? not much. the least number of laws was passed. we have not invested in people. in germany, they announced a program called agenda 2010, to bring down the employment -- the unemployment rate. germany is a major exporter. we need to invest in people, stuff we have not been doing that.

hopefully, in the next two years we will sort it out. olivia: was the relationship between the rate environment and income inequality? guests: it reduces growth potential. tom: can i put on my lb j hat? the way you do's investment is direct government incentives for companies to spend money. are we doing that? should we do that? guest: our tax code does that to some extent. we should invest more in research and development. we should invest more in infrastructure. tom: what is holding us back? guests: politics. congress has sat on its hands and has not addressed these problems or pushes them further and further into the future.

guest: you cannot see the benefits right away. that is part of the problem. tom: ibm, it goes from financial engineering to running a business. would you suggest with the success of the administration of a success of republicans getting this economy going again that corporations will be incentivized to do traditional business? guests: the corporate sector needs to do its job. they have the recovery act. corporate community needs to get together. we are seeing social pressure. mcdonald's walmart likewise what comes to investments. they should put some pressure on governments to invest more.

tom: we are going to come back and talk about the market. olivia: i am talking about the drowning california area we will talk about the consequences. stay tuned. ♪

tom: good morning, everyone. thank you for joining us. dingell best chart. olivia: california residents forced to decrease water usage by 25%. jerry brown announced the mandate saying the drought has reached a new crisis level. the chart is actually math. it shows how much the drought has the vault. no percentage was described as exceptional drought in 2011. the latest map reveals more than 40% of land falls under that category.

this is serious. tony: living the last six years in southern california, it does not feel like a drought. it is good the state is trying to tell residents there is one. it never rains in california. it rains one inch on average between april and october in new port beach. olivia: is your life going to be affected? are you going to be showering for a shorter amount of time? tony: i am very conscious of this. tom: you have the shower fixture a 55 gallon oil drum above his head. tony: it is a good thing to see

the awareness created. olivia: not panicked. coming up, moving to the minimum wage. seattle did it. should the rest of the city fall of -- of the rest of the cities follow? ♪

tom: be with us at 8:34 the jobs report. olivia: after nine years, a deal on enron's nuclear project is taking shape -- a deal on iran's nuclear project is taking shape. president obama must persuade congress to okay the deal. the campus massacre in kenya is the worst terrorist attack in 17 years in that country. one are 47 people are dead. the gunmen belonged to an

extremist group in somalia. china charges its security chief with revealing state secrets and taking bribes. he is the highest ranking official accused in a two-year crackdown. he was a member of the top decision-making body. a jury says chrysler is responsible on the death of a four-year-old boy and orders the automaker to pay 150 million dollars in damages. the child burned to death. the vehicle ignited after it was rear ended a recklessly designed gas tank was to blame. a bankrupted atlantic city casino is being sold for four cents on the dollar. it opened three years ago at a cost of $2.4 billion. the boys of summer will make more money than ever when they return to action. the average major league baseball players' pay --

first peter -- pay is $4.25 million. tom: a desire to speed up the baseball game. if they do not speeded up, i will not watch. let's look forward. "bloomberg surveillance." economic growth, lack thereof jobs economy. olivia sterns and i will go beneath the data to tell you of what the job economy is doing but what your paycheck economy is doing. i do not have an opinion about where we are.

we are there. do you have a prediction? olivia: our index has turned sour. a big diversions. the strength in the jobs market and the weakness it seems the gdp is growing at. back on the jobs front seattle instituted the first of a series of wage increases. our very own -- spoke with ed murray ahead of the move. this topic is front and center. you have these groups that say businesses cannot afford it.

anchor: businesses will not crows, but businesses will close. i spoke with seattle's mayor. he said ever since the city council pushed this approval last june businesses are coming to the city. he said he will be raising prices and he expects businesses to close down. olivia: did you find any supporters -- anyone not supportive of the move. guests: i did. the businesses that are local, a populist kind of thing, protecting the local mom-and-pop shops. they are for it. they have a next her four years to extend the minimum wage deadline. there is a dichotomy between who likes what and when.

not a lot at all. olivia: this is about 50% more than the minimum wage and the rest of the country. how do seattle stack up to the rest of the country? guests: they are number one or number two. oakland, california has the highest minimum wage. come 2017, seattle will be the highest minimum wage city in the country. tom: 1994, you have to read a couple of alan krueger papers on this. here is the heart of it. the state started changing the minimum wage. we have cities starting to change the minimum wage. should the federal government be involved at all? guests: we have a federal

minimum wage since president roosevelt. when congress was slow to raise it, we saw the states step in. i think that is a combination of a federal minimum wage and state is beneficial for the country. the u.k., they now have a national minimum wage. tom: we are lucky to have anthony with us. he wrote a 2000 page book a million years ago on the repo market. it comes under pressure. bill gross, he is at a startup firm in denver. he told me your world the liquidity is real.

guest: it is a market where you take a picture of your garage and you want to get money from is a you and use it. you have a lot of stuff. it is more difficult to take your stuff, to repo them. dealers, those who by securities are less able and willing to -- tom: what would be the ramifications? guests: intermediaries are less swearing to where risk. maybe they will not be as willing to bid. the bill of -- the bid spreads and the quote that strengths. investors have to be mindful of

it and work around it. tom: i did not think we would talk about repose when i woke up this morning. olivia: 3.6 7 million-year-old skull discovered. this is half a million more years older than lucy. really incredible. number two photo of the day, on the price is right, a model revealed the answer to a $21,000 are. the first to guess was wrong. she had two guesses left. watch this. she gave it away. she tweeted, i do not usually give expensive gifts but when i do, it is an expensive car.

march madness still going on. in first place the president of goldman sachs. third-place, john chambers. we have been speaking with the front runners. john chambers told us why he is rooting for duke to win the tournament. john: i am a duke fan. i have our basketball here with coach k's signature. i am a huge believer in do and love basketball. i have been lucky on this one. it is an honor to bring home hopefully money to second harvest food bank. olivia: how he determined to would win the tournament.

>> i think it was for guys that watch big ten basketball, it is obvious. olivia: a never pick up to talk about bank fines. you talk about march madness gary cohn shows up. tom: you have to understand stephanie walks around with a phone glued to hurt year. -- with a phone glued to her ear. olivia: tony, who are you rooting for? tom: alan krueger, what do you think? alan: i am rooting for duke.

harvard did pretty well. guests: i am with you. olivia: tom keene has done well. i went with oklahoma drill -- i went with oklahoma. tom: joining us will be bill gross and jim glassman. this is jobs day. ♪

>> this is bloomberg "surveillance." tom: a historic understanding between iran and the u.s.. israel worries of its survival. jobs day in america. jobs creating machine, but are we creating quality jobs? wages rise? alan krueger joins us. with us, jim glassman and bill gross of janus capital. live from our world headquarters in new york. i'm tom keene. joining the is olivia sterns. olivia: is the american economy

still churning out new jobs? we find out half an hour from now. the labor department report is due out. 12 months with gains of at least 200,000 jobs. it's been 20 years since that happened. wall street will not be reacting today. the market on market open until noon. israel's capital criticized the iran nuclear agreement. benjamin netanyahu says the plan threatens his country's existence. president obama warned iran and must hold up its end of the bargain. president obama: if iran cheats, the world will know it. if we see something suspicious we will inspect it. efforts to weaponize will be addressed. iran will face more inspection than any country in the world. if congress kills this deal

without offering any reasonable alternatives it is the u.s. that will be blamed for the failure of diplomacy. olivia: john kerry outlined the plan to keep iran from building a nuclear weapon. it is not the final step. secretary kerry: true measure of this understanding is not whether it meets all the desires of one side at the expense of the other. the test is whether or not it will leave the world safer or more secure than it would be without this agreement. there can be no question the comprehensive plan we are moving towards little more than pass that test. olivia: diplomats from the u.s. and five other world powers have a long to-do list they had until the end of june to finalize plans. cheers in iran. oil prices down the board. brend down nearly 4%. the campus massacre in kenya's

is the country's worst terrorist attack in 17 years. 147 people dead. islamic militants attacked with a plan. 4 gunmen belonged to al-shabaab a group based in somalia. the group also bombed a u.s. embassy in nairobi. two women arrested at their homes in queens prosecutors claim the women discussed violent jihadist views with an undercover officer. a search turned up on making plans and materials. leaders in two states trying to move forward a day after easing so-called religious freedom laws. mike pence of indiana and asia hutchison of arkansas signed updated bills yesterday. original measures offered a legal defense for businesses that refuse to serve gays and lesbians. tom: this is quite a story. and then lost at sea for 66 days is reunited with his family. a cargo ship spotted louis jor

dan 200 miles off the north carolina coast. coast guard choppers gave him a lift. he survived by drinking rainwater and catching fish with a net. does are our top headlines. a special edition of bloomberg "surveillance." welcome worldwide to our jobs day. the most important snapshot of the american economy. alan krueger. joins us. we welcome james. carl of bloomberg intelligence. he was in the engineering quad it is great to have you. how is alan krueger perceived at princeton? coral: he is a rock star.

tom: he comes in one day a term to lecture. frame the urgency of the jobs report. how important is this data? carl: this is important for a couple reasons. two grand macro economic experiments taking place. one is janet yellen's experience. if we redline the economy we can bring marginal participants back into the labor market. labor force participation is a theme. that is probably something we don't have to focus on until midyear when we see wage inflation. the other thing is the economy is having its wily coyote moment. it runs off a cliff and has not looked down. we are seeing a fairly significant stall in manufacturing, isn has been -- ism has been grinding lower.

the factory sector is being hit hard by the strong dollar. if that stalls, is it going to bring the rest of the economy down with it? i don't know that that is the case but i suspect we are going to see that. tom: every jobs day is the headline data, what will you be looking for? carl: i don't think we will see a stall but the risk is down shift more pronounced in the second quarter. i will look at the manufacturing components. manufacturing payrolls, over time in the manufacturing sector aggregate hours. tom: you go that deep? carl: look for evidence that there's rest in the rust belt. tom: there is actually a new animal spirit out there as we enter summer of 2015. >> there are more job

opportunities, people are more willing to leave a job looking for something else. those are signs of belief that the job market is doing better. the thing that is interesting, we look at the economies with different lenses -- the gdp perspective and the production side. tom: which is the best? jim: the employment site. since labor day, the pace of hiring has quickened the growth and ours has quickened. even as gdp has slowed. you are getting a dichotomy and the underlying economy is doing fine. there might be disruptions from the weather and the port being shut down. tom: alan krueger was at the white house when this became a catalyst. jen: absolutely. tom: that's the question, we have the catalyst going and now why as we go into the rest of the year. olivia: we will continue the conversation about gdp with jim glassman later on. maybe this is a question for

you. you think if you look at production indicators you're going to see a good job's number. what about weakness in oil and slower global growth? the stronger dollar, soft oil and what it does to capex. jim: we are aware of those things but we are not aware of other stuff going on. to me, the most important indicator is jobless claims. every thursday morning jobless claims are telling you it is steady. unemployment going up in colorado -- tom: have you ever seen a number of this low, this good. olivia: no. jim: of all of our numbers, this is the most credible and this competence of. -- most comprehensive. if you lose a job, you file for unemployment benefits. it gives you the most comprehensive view. for all the negative things we know about it tells us there is

something else going on. olivia: well what would you have to see to change your rate hike call? jim: a strong jobs report would make people think the fed is going to start tightening in june. it takes a long time to see a pattern in wages. olivia: what if we get 150? jim: in the context of where we have been heading i think it would be an aberration. tom: do revisions matter? >> you always watch revisions. i think economists are sanguine about the impact of a stronger dollar. tom: do you agree with that? it is a raging debate in academics. alan: the key question is are we going to see consumers make up for the weakness and exports. i will be looking at what is going on with employment in retail trade.

we've had strong job growth. we've had some wage growth. growth and hours. we've had gasoline prices down. tom: a labor market economist here. carl and the team looking at the minutia. what people want to know, have we reached escape velocity from this horrific crisis? if you were sitting with the president, could you tell him that? alan: i was thinking when jim was talking, what he was saying is the exact type of thing i used to tell the president. we've been growing 2% or 2.5% every year. we have been escaping but not as fast as anyone would like. there are things congress could do to boost the rate. we've had a self-perpetuating recovery for the last few years. i suspect that will continue

with ups and downs in the gdp numbers. tom: olivia, can we had a jobs day 10 times a month? olivia: this is like tom keene's christmas morning. you gave us a list of white consumers could be spending more, they just are not spending more. -- why consumers could be spending more, they just are not can spending more. alan: i think it is because of lags. people will start spending more. it is a puzzle that retail sales have been as weak as they have been. we have more confidence in our job market indicators. insurance claims are the strongest indicator. tom: carl, thank you so much. next time, take economics. olivia: that would make me so nervous to sit next to my professor. still to come on jobs day. tom and i speak to bill gross of janus capital. his reaction on the march

payrolls report. can you wait? tweet us. how will this report and packed the decision on rates? this is bloomberg "surveillance," tom and i will be right back. ♪

tom: good morning. jobs day. in 14 minutes we will give you the report. olivia will go beneath the headline data about the american labor economy. let's go to the terminal. here is a trend in the unemployment rate 1995 to

beginning of the crisis. this is when alan krueger went to the white house. the crisis deteriorated -- not true. an improvement here. down to nairu. nairu, do we have a clue where there's economic concept is? jim: the fact that policymakers are having to change their mind tells you this is an empirically based concept. we will change our minds as we learn what is going on. at 25 years we have two observations of where the unemployment rate got down to at the peak. we had no inflation problems in the late 1990's. we do not really know, we change our mind as we see what is happening. tom: that gets you set up for the jobs report. what we do know is we have a data check. some markets open, many not. dow closing yesterday.

two-year yield, 0.53%. to four digits in a little bit shoving lightness and the estimates as we get in 14 minutes. olivia: this is bloomberg "surveillance," on olivia sterns with tom keene. some top headlines. israel's slammed the iran nuclear deal. john kerry and his iranian counterpart revealed terms to stop iran from building nuclear weapons. both sides say it is historic but not the final step. president obama must persuade congress to ok the deal. the campus massacre in kenya as the country pass's terrorist attack in 17 years. 100 47 people or debt. --- 147 dead. the gunmen belonged to else about. -- to al-shabaab. the copilot of the doomed

germanwings flight researched cockpit doors. the second data recorder shows lubitz increased the plane's speed as it plunged into the mountain. senator robert menendez says the truth will come out in court. the new jersey democrat pleaded not guilty, accused of doing political favors and taking gifts and contributions in return. samsung will make the main chip in apple's next iphone. sam is getting the job. samsung last the job to taiwan semiconductor. televangelist robert schiller is dead. he gained fame from one of the first u.s. make a churches. it was the location of his hour of power shows.

he was 88 years old. tom: alan krueger on a jobs report, jim glassman with us as we get to the report. we give you the data about 12 minutes away. bill gross on the back side of the half hour. the jobs report, washington, and of course investment in this low rate environment. olivia: gdp, a gauge that does not accurately capture the economy. what is gdp failing to measure? jim: there is a lot of changes going on in retail. we are living in our phones and doing a lot of stuff in our smartphones. here's an example of something that is missing. the decline in oil prices is exaggerating this.

a large number of people are buying gas from walmart safeway, cosco, wawa. gdp figures do not know that. when you see core retail sales weak, a larg percentage of big-box stores are with gas prices. our statistics have not kept up. if you know the percentage of the gasoline, you would deflate and figure out that core retail sales are not as weak as you thought adjusted for inflation. when you have gas prices plunging like they have been it is amplifying or exaggerating the weaknesses in the way we measure what is going on. tom: your experience, out of northwestern. professor krueger, the media does jobs day and economics. with this certitude that you guys do not have.

you are going maybe, maybe not. alan: the revisions tend to be quite large, gdp gets revised for several years. we have not invested enough. if the government were a corporation what corporation would invest so little in knowing how well it is doing? olivia: jim, you say we should be looking at production side. jim: our employment data are the most reliable. jobless claims -- what these numbers have been telling us is the economy has been accelerating since last summer. even though the gdp statistics do not see that. i think that for all the weaknesses the jobs report is the most reliable and most comprehensive and timely. olivia: what is the most important gauge on janet yellen's dashboard when it comes out? jim: everybody is going to be looking at wage trends.

the fact is that it takes six months to a year to understand that the trend is changing. with the wage numbers this morning, they are volatile month-to-month. the underlying trend -- tom: are we measuring wages? alan krueger is adamant that wage growth is better than gloom stated. jim: if you want to measure wage growth, the best measure is the employment cost index. another way, not a index, the compensation cost. does have been growing stronger then the data we're going to get this morning. tom: alan krueger on a discussion about america a bimodal america. it is not one america, there are two americas in the jobs economy. olivia: if we don't look at the headline number, the 2% number

are both tears of the economy growing more than 2%? how does it filter out? alan: virgin recently because of the growth in capital income. if you -- divergence recently because of the growth in capital income. if you look recently we are seeing an increase in the bottom half. tom: do you agree, jim glassman? you were in front on teenage unemployment. jim: a little bit. low skill jobs, that is not where the problem has been. the problem is middle skill jobs they have been displaced by automation. olivia: is that a problem? we had tony of pimco and he said 85% of american jobs are in the service sector. jim: my clients complained about not having people with the right skills. they claim there are jobs in manufacturing. not the same as in the old days but there are possibilities. now with the oil sector squeezing down, pay levels for

people in some of those fields is starting to come down. tom: what happens if the unemployment rate goes under 5%? jim: thank god. tom: there's no downside. are we ever employed? -- over employed? jim: i don't think so. there is a lot of hidden part-timers working involuntarily part-time jobs. and young people who dropped out during the recession. tom: how do you wait the importance of the u6? jim: it gives you a better sense but i am more interested in people displaced by the recession. that tells you the rate is not as low as 5.5%. tom: jim glassman, thank you for your support on jobs day. senior economist at jpmorgan chase and co. olivia: 5.5 minutes away from the march jobs report. bill gross will be weighing in on bloomberg "surveillance with tom keene and myself waiting in on the labor economy and how to

maximize your risk versus return in this market. what bill gross's strategy is to trade the jobs day. bong market open until noon, this is bloomberg "surveillance. streaming on your tablet, your phone and bloomberg.com. ♪

tom: welcome to a special edition of jobs day. two minutes the jobs report. alan krueger writing a few years ago.

krueger's out front. "it may be better to look at the employment to population ratio. this is not affected by whether someone is counted as in or not in the labor force." what is the ratio tell us right now? alan: we are seeing some recovery but it is pretty far from normal. what i expected is we would see labor force participation decline when others were expecting a bounce back. i thought the long-term unemployed would leave the labor force. that is what we have seen and one of the reasons why the rate has been coming down. tom: ben bernanke and larry summers having a fight over secular stagnation. is dr. somers onto this? alan: i hope not. i think you did a good service raising the issue. i am more optimistic about the potential for the economy. i would like to see us take

steps to increase immigration and increased demand in the economy. in the past, secular stagnation did hold and i am hopeful it will not hold now. tom: great to see it bernanke blocking. a data check into the jobs report. i look at yen, stronger yen in the last 30 seconds. we will watch the two year yield , everything is coming back that is the macro analysis. futures pick up as well. the yen, 11972. good morning, bloomberg "surveillance." we welcome you to our coverage of the jobs report. olivia sterns and our team in new york. we will go to washington and the

bureau of labor statistics and peter cook for the headline data on the jobs report. the revisions are important, looking at the yen, 1.1967 shows the uncertainty as we go to the state 30 number. -- this eight: 30 number. here's peter cook. peter: 120 6000 jobs in march, a big mess compared to our survey of 245000. unemployment holds steady at 5.5%. wages move higher. perhaps the possibility of a soft patch. 126,000 jobs in march, the lowest figure since december 2013. revisions take away another 69,000 jobs from the prior two months, february standup 264,000 in january 200-1000. snaps the 12 month or better streak. three-month average at 197,000.

the participation rate drops to 62.7%. the number of unemployed fell the underemployment rate stands at 1029%. the first time we have seen that under 11 since august of 2008. some signs of improvement.. as for who was hiring. the big impact is mining and logging. perhaps the first impact the drop of oil prices. mining and logging down 11,000. 10 million lost in the mining support activities. flat for oil and gas extraction. construction off, it may manufacturing off, government off. professional and business services up 40,000, retail 26000, health care 22,000. average hourly earnings up 0.3% month over month.

the year-over-year improvement 2.1%> workweek dips to 34.5 hours. not what our survey expected and perhaps not what the fed expected but some signs of improvement in terms of wages for janet yellen to consider. tom: thanks so much. a complete report. this is a market moving report. olivia guest this. she nailed the vector to a weaker report. let me summarize what we have seen. this is bill gross's world. the 10 year yield comes in like a rock nine basis points to a 1.83. yen is stronger with a risk of field. -- risk off feel. equity futures -6,. not trading today. three month moving average for nonfarm payrolls is still a good number. we welcome bill gross.

how do you adjust a three month or six month forward view off of one month of data. bill: i'm more interested in how janet yellen does it. she had a speech a week ago friday. basically she said confidence in a 2% inflation number, which is their target would be affirmed by job growth. that is the rule she's following, not wages which we see moving up or inflation itself. obviously the economy is cooling, reports from the atlanta fed suggest the gdp in the first quarter will be weaker. tom: the two year yield has gone from .60 2.476. -- to .476.

how can the fed consider june or september with a yield at that point? bill: they cannot if they are following the private market. that number is staggering. with a term premium even 48 two year that suggests that fed funds stay at 25 basis points for the next two years. they look at the private market. the private market is different than what the fed blue dots say. 33/4 in -- blue dots say 3 3/4 in 2015. if they listen to the private market we have a while before they raise rates. olivia: we know you are in the lower for longer camp. is 126000 weak enough for you to change your assessment of when you think janet yellen will move?

bill: not yet. tom mentioned the three-month rule, i think that's the best way to look at it. i always thought the fed wants to get off zero if only to prove they do not have to stay at zero for a long time. i think there's going to be one rate hike in 2015 probably in august or september. and after that janet yellen has promised she will be very careful. she scites examples in terms of the japanese experience and experience in sweden and finland and all those countries that have made mistakes. she's going to go gradually. i think 50 basis points a year would put us at 2% in 2018. tom: which is lower for longer. we heard stanley fischer talking about that. alan krueger from princeton university. one of the triumphs is the u6

below 11% the all in unemployment rate, 10.9%. we have not seen that since the late summer of 2008. within a difficult report there are structural victories. alan: i don't think they are big victories. if you look at the household survey job growth this week, labor force participation felt. -- fell. the good news is wage growth, .3% over the month. maybe there is a pick up and wage growth. on the other hand there suggests there has been a slowing, as many other indicators have been suggesting. one report does not make a trend. i think the fed will look at what else comes in. we're probably due for a week report with 12 months over 200,000. these numbers tend to be noisy and get revised. unemployment insurance claims continue to suggest the job market is recovering.

work hours ticked down in this report.. hard to put a positive spin. tom: the two year yield .49%> yield has come in. olivia: 5 basis points. looking at what went wrong, and ailing manufacturing sector. week payrolls, manufacturing hours decline. tom: is that dollar induced? have you become a currency expert? bill: i think so. i've never been a next bird but i follow the dollar. the famous j.cerve -- j curve suggests that it takes six months before a strong father begins to affect our economy. we are seeing it with oil and other goods. i get a point on u6 and u3 --

you mentioned it's down to 10.9%. i think the real debate is the new nairu, the natural rate of unemployment. they seem to think it is around 5.5% or 5.25%. u6 with tell us something different. 10.9% is 550 basis points higher than u3. it normally is about 300 basis points. that indicates lack of2% to 3% about 2 million jobs. the debate is what is nairu. tom: what does bill gross think it is? bill: 4.5%. u6 is so high that there is

slack. you talked about the participation rate, that is part of u6 and how many people will come back to the labor force. i've done some surveys in terms of the taylor rule, anybody can do it. you put in taylor and you put in your own numbers for nairu and the real rate of interest. if you put nairu at 4.5% and you put the real interest rate at zero as opposed to it 2%, what the fed expects, you get a fed funds rate of about -50 basis points. which means they've got to go back to quantitative easing. i don't think they're going to but that is what the taylor rule would say with nairu the difference between 5.5% and 4.5%. olivia: did you think this would be as big as a nerd fest? tom: we had a radio app for the taylor rule.

bill can waste three hours a day playing around with the formula. olivia: the two year has come into .49, does this change your strategy? bill: not much. my strategy has been based on the difference between u.s. treasuries and german bunds. tenure german bunds -- 10-year german bunds. that's a huge spread. these economies are equal in terms of the quality. what does the difference say in terms of 175 basis points? for the next 10 years, said funds in the u.s. will be 175 basis points higher than the ecb's neutral rate. i think that is a widespread. olivia: stay with us, we will be

back. more on the mars jobs report. 126,000 jobs added. huge miss. unemployment at 5.5% ♪

tom: good morning from new york city. our jobs day coverage. a jobs report moves the market. bonds higher and yields lower. what have you done to your portfolio in the last six weeks anticipating your call of a lower for longer bond environment? bill: very bullish on treasuries and a slower economy. bearish on german bunds has been my basic trade. i have what they call three years to four years of duration in treasuries, i earn an average maturity of four or five years in terms of treasuries and i am

short because that is what unconstrained funds do, i'm sure the german bunds -- short the german bunds and trading is collapsing as we speak. that is the trade of the day go long treasuries and short bunds. tom: we will come back for a larger conversation with you and professor alan krueger. do you just assume greece will leave europe? bill: those are tough odds. it is like saying duke will win the final four. i think greece will stay in i do not think it solves the long-term structural problem of a disunited fiscal community versus a monetary community that wants coherence. tom: bill gross with us and alan krueger from princeton university. olivia: so much more to talk

about. 15 more minutes of us. how much will today's payrolls report play into the rate discussion in the u.s.? more with bill gross and alan krueger on good friday. this is bloomberg "surveillance." ♪

tom: what a privilege to talk to alan krueger about interesting stuff. this is a market moving jobs report. futures -12 dow futures -107. yields dramatic. top headlines. olivia: a deal on iran's nuclear program taking shape. john kerry and his iranian counterpart revealed terms to keep iran from building nuclear weapons. both sides say it is not the final step. president obama must persuade congress to ok the deal. the campus massacre in kenya is the country's worst terrorist

attack in 17 years. 147 people dead. the 4 gunmen belonged to our -- al-shabaab. a country's worst terrorist attack in 17 years. strong hint hillary clinton is running for president. her team has signed a lease for two floors to set up campaign headquarters in a brooklyn building. no response from clinton's spokesperson. china accusing its former security chief of revealing state secrets and taking bribes. authorities charged zhou yongkang, strong the highest ranking official in a two year crackdown on graft. toyota seeing growth, the automaker planning new factories that would end a three-year freeze. toyota will spend $1.25 billion on new plants in china and mexico. the last of the 68 teams that started the ncaa tournament are preparing for battle. tomorrow evening at 6:00 p.m.

come michigan state faces duke followed by wisconsin against kentucky. the wildcats flirting with history, only seven teams have gone undefeated and advanced to win the national title. the last time it happened tom was a teenager 39 years ago. tom: i was a teenager. i love you. olivia sterns on jobs day. wonderful to have bill gross from janus capital and of course alan krueger. to get us started, i thought we would do this as passover begins tonight at sunset. and of course, within good friday as well a broader view on europe and the u.s. alan krueger, you were with mr. varoufakis of greece in the last seven or eight days. what is the urgency for the leadership of greece? alan: greece is playing a

dangerous game. they don't have much bargaining power. the situation is not sustainable where they are. yet the greek people seem committed to the euro. not clear how this gets resolved. if you would have asked me four or five years ago i would say greece would be out of the eurozone by now. tom: what people do not know about princeton is you have a national resource, the author of "the art of strategy," princeton owns game theory. what is the game theory you spoke to varoufakis about? alan: game theory was invented at princeton but it has spread. it is not clear they are playing a strategy that will work, making threats against germany is going to discourage investment in greece. i think the current government has a bit to learn, they are not ready for prime time. tom: bill gross, we are ready for you on jobs day. let's talk about the game theory of bond investing, note investing and re in -- repo

investing in europe. what is the game theory that janus capital plays? bill: the liquidity story is the $60 billion a month that mr. draghi and company are engaging. no one knows what maturities they are buying but we know the first 60 years in term of the german yield curve is negative. the two-year in germany is -25 basis points, the 10 year at 15 basis points. money is free and probably will continue to be for the next 12-15 months. there will be liquidity provided by mario draghi. what is that do for the u.s. and the rest of the world? basically, what has happened is that we have kicked the can. we have passed the con from our quantitative easing from our quantitative easing to the ecb's

quantitative easing. the real rub that we will find out is 17 months from now whether liquidity in a more normalized well insufficient. i tend to think liquidity will be very thin and narrow 18 months from now but for now it is decently liquid. olivia: there will be liquidity. you are selling volatility. why is that the right strategy? bill: selling volatility basically means that you think interest rates will trade within a certain range. let's take germany, i have been beating back to death. the german 10 year at 15 basis points. in my world, the german tenure can live to-5 basis points -- can move to -5 basis points or plus 10. i don't think you make a lot of money by buying the german 10

year at 15 basis points and i do not think you make money by buying the u.s. 10 year at 1.79. if volatility has been dampened by quantitative easing in euro land everybody believes just the opposite. everybody believes volatility will go higher but i think the ecb is anchoring their market. and therefore anchoring our market and selling volatility around that. tom: bill, this is the arch coal. if there's no vol, a lower terminal rate.a re we in a new neutral, a new mediocrity? are we going to the 30's? olivia: a new neutral real rate? bill: i've got two hours on this. olivia: we will make time. bill: the experience from the late 1930's to 1979 when paul

volcker turned it around with real interest rates, the experience through world war ii and into the 1950's and 1960's was that the real interest rate averaged about -2%. that is the historical example. ben bernanke in his blog this week he basically says no deal. if interest rates are that low surely someone in the rest of the world would want that money and use it for investment. larry summers thinks the opposite, that there are structural influences in terms of high debt and demographic aging populations, headwinds that reduce the real rate. i'm in that camp if only because we have high debt relative to gdp. everywhere in the world. high debt, you need lower real interest rates to keep the economy above water. olivia: what are you looking

for? what is going to be your signal that rates have hit rock bottom? bill: well, in the u.s., the signal would not be clear. you have this huge spread between 15 basis points in germany but if we move closer the u.s. treasury can continue to rally. i think where it is now is basically pinned between 1.65% and which was necessitated by recession in their qe. 2% and that is the range i am playing. tom: alan krueger and bill gros

s. the market making one bet, which we see with the ten year and two year. the fed is on one, themarket is on one. is the market telling the fed what to do? alan: there's some of both. on the long end the fed cannot do that much. on the short end the federal reserve is more important. tom: are you telling janet yellen what to do? bill: not bet, which we see with the really. the bond vigilantes are third or fourth place. the central banks are key, then there is a reserve purchases by emerging companies that is the dominant influence. the vigilantes, if there were

any, are weaker these days. olivia: how much lower do nominal policy rates need to be than nominal gdp? bill: good one. olivia: thank you. alan: back to the taylor rule. bill: history will not give us an example but from 2010 isthan an instructive period. it's the period we are trying to recover. in 3 major companies -- germany, the u.k. and the u.s. have done the best. they've generated real gdp at 2% and inflation close to 2%> nominal gdp about 4%> the average policy rate for these countries for that period has been 50 basis points. a minus an instructive period 1.5% real and minus

3.5% nominal. tom:

betty: this is "titans at the table." we are taking you to the high seas to find out how one classic vacation industry is keeping up with the modern age. the cruise industry raked in more than $37 billion in revenue last year, setting sail with more than 21 million passengers. what does it take to be the biggest fish in the sea? we find out from the two biggest ceo's in the business. >> they want the biggest and the best. and this is the biggest and best cruiseship out there. betty: this is the ceo of r