welcome to "bloomberg daybreak." alix steel is away on this payrolls friday. it is like that. futures in the united states pretty much dead flat. dow down about 11 points. not even negative at a single point. switch out the boards. yesterday was the pre-payroll squeeze. looking at treasuries. the yield is down to 235. a bit of calm, but not in china was a weaker chinese currency. david: what you need to know. jobs, jobs. today is nonfarm payroll is about one president-elect trump said is the most important goal of his administration, he wants to add 25 million jobs in 10 years. how many were added last year? since that a year yuan felt as much and a single day. in the prior two days, it shot of more than any other day.

the central bank raised the fixing rate less than anticipated. tweeting for jobs. he may not be president yet, but donald trump is moving forward on creating jobs by tweeting about companies making things. today, it is toyota's concern with mr. trump threatening a border tax. that is what you need to know. jonathan: thank you. today's job reports is julie hyman over in a d.c. great to have you with us. what are we expecting? julie: let me run up to the numbers. nonfarm payroll estimates 175,000. don't applaud the unemployment rate is expected to pick back up by 0.1 percent after a nine-year low in november. average hourly earnings, 2.8% gain is year after year -- year over year. 0.3%. the three big headlight numbers

we will be looking. ,lso key is participation rate which we have been watching, the federal reserve and economists and investors have been watching. it was 62.7%. the fed in particular as pointed out on the bloomberg, the fed will be looking at the rate for folks between 25 and 49. are more of the people rejoining? are more going part-time to full-time? we will be looking at those numbers. you all were talking about a donald trump's campaign promise, 25 million jobs in a decade. give perspective, if you look at the numbers, the estimates for today, 2016 total advance could be 2.2 million. that would be job gains more than 2 million hold the longest streak since 1999.

in contrast, the forecast for this full-year is 1.9 8 million. we will see if it is a tall order to deliver those 25 million jobs. jonathan: great to have you with us. julie hyman. david, it is remarkable, isn't it? how much exit capacity is it there really we do not expect? trump said his top priority is creating the u.s. jobs. to takeow weighed in action. he tweeted about gm and toyota mexico andobs from ford decided not to build the mexico plant. and investors are trying to figure how to respond to these almost daily tweets. harris putay, david out the pluses and minuses. >> the question is, whether

these tweets are really a reflection of policy, are they threats? are they trying to establish a stronger bargaining position as they look at nafta? who really knows at this stage. that is the problem with the government by tweet. this is the negative part of what mr. trump is portraying as the future president of the united states. the positive is the type of people he is bringing in his cabinet and the direction. deregulation and lower taxes. a man with us is a man who has been with the donald trump and now chairs his inauguration bank -- in them,ion -- an operation tom barrett. it is jobs day. does initiative. his initiative, where does it fit and a larger program? tom: is a new world for all of

us. the criticism of tweets is a little early. he is the president-elect. he is not the president. maybe a new form of vision has taken place. it has taken place in other every aspect. is it inappropriate for him to sound the warning shots of what his personal point of view may be? i think it's totally appropriate. in fact, you can see the consequence as congress is looking at his own ethics decision. a tweet in the morning can turn the cycle. i think we have to give him a chance to see how the communication evolves. the great thing about america is nothing happened quickly or abruptly. the ability to move these positions is based on weaving tapestry with congress and returning from washington, everybody is hopeful. i've never seen congress so invigorated or ready to embrace a point of view.

and you have a president that has a philosophy of doing it now. he is going to get it done. his cabinet choices have been impeccable. laborthe new designate of will be phenomenal. what can he do on the job? certainly, send sound waves saying america first which is where we are going. that's how this america -- this is how this president has won his constituents. infrastructure is going to be huge programmatic the jump which will create a jobs over the next decade. david: it is way early. we have two weeks until inauguration that you are putting on. we are going to get some sense of what the plan is with the jobs. the 25 million number is a big number considering how many have been created over the recent years. what can you tell us? what the larger plan might look like?

today arek: there finalizing those plans. that comingg to see out in the next three days. the 100 day plan is simple. what he has against technology is difficult. technology is taking away most of the jobs. automation as it increases, decreases jobs. is goingirst syndrome to let's stabilize what we have and not lose those. one of the things you will see is impacted is infrastructure and tax planning. the first 100 days is about the domestic economy. do what he said he will do. emigration, tax planning, obamacare, although things in process. infrastructure intact go hand in hand. if you can bring back $1 trillion of offshore capital and tie that to investment tax, tax

credits and put that in infrastructure bank, trade jobs is the easiest place to great 25 million jobs. -- create 25 million jobs. in things wee back have not done in 40 years is a easy layout. it takes a federally assisted program like fannie mae or freddie mac to subsidize the public/private partnerships. jonathan: to pick up on automation. if it is the problem, why on the campaign trail was in the not discussed? why was all about immigration? the campaign trail is a campaign trail. the president is the president of all of americans. at that500 participants will help them craft a plan for everyone. it is just a component. jobs are not easy when you have basically a deflating economy. everything is cheaper. everything is easier. there are fewer people are involved.

what is the effect of that on everything? the effect on that on the insurance industry? these far-flung issues you have to allow to go forward which are not really campaign issues. americansssues are are suffering. a stitch said we want change. david: one to seeing clear, you mentioned the reproach nation -- and repatriation and connected to investment. the point you can bring money back if you invest in plant and equipment rather than buying backstop? exactly.ck: the logical thing is not to reinvest capital but have a buy back stock. the incentive is give them a tax credit, $.82 of every dollar they invest and leverage that five or six to one and let it rip. david: very interesting. witharrack will be staying us. let's get an update on what is making headlines out of the business world.

we turn to emma chandra. emma? president elected donald trump meets with the targets of his most recent criticism. chief of the u.s. intelligence community. they will brief him on his findings. the directors of the fbi and cia will be at the meeting and national intelligence. taking its first step towards reducing military forces in syria. a russian aircraft carrier is being withdrawn and so are ever -- so are several other warships. by russia anded turkey has been in place for almost a week. a diplomatic slap between japan and south korea over a new statue. it commemorates koreans into brothels before and during world war ii. japan has long downplayed the women's' existence but lesser apologize.

-- last year apologized. it has suspended currency swap talks. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries, i am emma chandra, this is bloomberg. jonathan: thank you. we are away from the payrolls. the calm before the report. abigail doolittle. abigail: as has been discussed, continues toing move market. in japan, the three big closed lower on the session in reaction to president-elect trump yesterday attacking a 20 month plan of toyota to build a plant in mexico saying "no way. build a plant in the u.s. or pay a big border tax." toyota said they can build a plant in mexico without harming the u.s. turning to car stop doing better

is chrysler. of about 12% this year after seattle chrysler did reiterate their goals including the idea of paying down debt. see at chrysler was at -- chrysler at is list. the news that amgen did win court ruling to have santa fe's cholesterol drug banned in the u.s. at based on patent infringement. an unprecedented situation. it cut affect $2 billion worth and its from sanofi partner. they have 30 days to appeal. david: trade troubles. china is said to consider stepping up. we will talk with tom barrack with what eggs may have to be broken. that is next. this is bloomberg. ♪

david: this is bloomberg. sold more than it has in the year after a record rally yesterday. we bring in the chief asian economic correspondent joining us from hong kong. that is the question. what is going on? report: the bears have not gone away. that is what we learned in hong kong. they are still nervous about the yuan and trying to get ahead of the curve with capital controls they were introducing. howrrow, we have reserves, much money they are spending to protect the yuan. they do not want it to slip beyond $3 trillion. we are inching towards a that number. they will tell us how close we are.

the dollar, whether it remains strong with a rate hikes. for now, all the pressure on the yuan. pressure to get money out of china and plenty for the bears. of thethe backdrop concern about tray piled with a trump administration. you have a piece on that subject. talk is about that. enda curran: a growing concern in asia and traders are warning about a 1930's situation. the concern is if the government goes beyond china and into areas of computers because it would spill over into the much broader supply chain and hurt economies like south korea and taiwan. a feeling it could be negative for asia which is the world's fastest-growing economy. on the flipside, china is making clear they have a room to respond. we had a story saying they can target a chinese or u.s. inbound investment into china and target

particular sectors and companies and retaliate if they wish. by all accounts, looking at a nervous outlook for trade. david: enda curran reporting from hong kong. jonathan: still with us is tom barrack. a quote from one of the chinese newspapers and read as follows, flowers outside of the ministry of commerce and sticks waiting inside. it is not a good thing, is it? tom barrack: it is the usual thing. the misnomer we as americans have his long-term planning for us is 30 days. short-term planning for china is 30 years. , thinking that these short-term & flows will affect their business with us is a mistake. necessity of both countries needing to each other is evident . the way we approach it is very different. our trade negotiation style has

been outsourced. this is part of the challenge that the president-elect is trying to approach. if you really look at the method , the mechanism in which the dialogue takes place, there is no direct method, no bilateral communication. multilateral and central-bank wars. what ever you try to accomplish in trade, you give up and central-bank intervention. central-bank intervention including buying our assets. ebb and flow,s they are one of the largest owners were debt, by the way, what happens in destin area as we ramp up import-as for dialogue, there has to be dialogue. with thet of dialogue way of dialogue with the chinese is flowers interesting but a stick does a lot more attention. we need to the attention of their philosophy.

what their culture is and that the chinese are terrific. we have a great relationship with them. we will have a long relationship. part of not hearing to tpp is dealing directly with the china is probably the answer for jonathan: bilateral is him take a long, long time -- long, longm, takes a time. if he gets a second term to achieve any ink between now and then, a back and forth an escalation of rhetoric. how will that help?'tom barrack: maybe not. we have a desert me out of the reagan administration. if you look at how trade negotiations take place, nobody has authority. -- we have a new designee out of the reagan administration. he sits with the chinese and has no authority and comes back to congress for 500 votes on what is to happen. part of what might happen is the

reallocation of the executive legislativea supervision, what they call fast-track entacapone is through real negotiations. when you are sitting with the chinese, abiding who has power and authority, part of the president-elect tweeting is a change in a very slow process which of the chinese will win. they will out weight our sequential structures. david: a washington insider, a skilled trade negotiator, is that number one on his agenda with donald trump coming in? tom barrack: i think has a number of things that is his priority. he is a very well-versed hand. agenda,er is he has an a priority, he knows how to work the hardware. the hardware nerd does not work. we have outsourced to third-party institutions. there is no enforcement mechanism. he knows how to fix it that. he has respect for the

bureaucracy on the other side. i think you will see it turn towards bilateral is. -- just: coming up next over a couple of weeks away, and our away from the december u.s. jobs report. the data. plus a black rock -- black rock joins us. this is coming up. this is bloomberg. ♪

jonathan: this is bloomberg. president-elect donald trump expected to meet with u.s. intelligence chiefs later. comeylapper, brennan and will give their take on hacking. this after trump continues to display skepticism about intelligence officials' work. we can us through what

expect is kevin cirilli at trump tower. great happy with us. what is on the agenda? willat we expect is trump meet with top u.s. intelligence officials. it comes following yesterday's capitol hill briefing in which some within trump's party questioned the russian meddling in the u.s. government response to it in the election. trump tweeting he was disappointed that president obama received a copy of the intelligence briefing regarding russia that trump is said to not only received today at gover with top intelligence officials. this is the first meeting with fbi director james comey, who of course played a central role in the u.s. election. jonathan: i will let you go. freezing. david: it looks cold. donald trump may be the most active president-elect in u.s. history and still with us is the

man in charge of keeping up with him. tom barrack is also in charge of organizing the trump inauguration. tell us what we will see. tom barrack: you will feature the to america. this president-elect said simple thections, this is for people and by the people and allow them to breed a history of to injury years of what exists in washington. it is not about him. -- brief a history of what exists in washington. the biggest power to choose send in the world. what you'll see is a very soft touch tuesday through saturday. to sell oriented events focus on the things important to us. i have to tell you as you walk through the memorials themselves, you become so patriotism of the the founders and that is his focus. he wants to get back to work. he wants america to ruffle in this change of power, which is

awesome. when you think of that in five seconds from president obama, the weight of the world just evaporates from his shoulders to the president-elect's shoulders sitting of the platform of the west side of the capital, and unbelievable moment. david: part of the genius of the republic that it happens. tom barrack thank you for being here today. he is colony capital founder and executive chairman. coming up -- we will have the jobs. now. an hour from the report, the last of the obama administration. what effect it will have on the fed hike? this is bloomberg. ♪ with the xfinity tv app,

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only xfinity gives you more to stream to any screen. download the xfinity tv app today. i've spent my life planting a size-six, non-slip shoe into that door. on this side, i want my customers to relax and enjoy themselves. but these days it's phones before forks. they want wifi out here. but behind that door, i need a private connection for my business. wifi pro from comcast business. public wifi for your customers. private wifi for your business. strong and secure. good for a door. and a network. comcast business. built for security. built for business. jonathan: this is bloomberg. i am jonathan ferro. and look at the markets. the calm before the reporting. dow futures are down. not even zero paul 1%.

switch out the board. threeday was about payroll squeeze. treasuries rallied hard. -- pre-payroll squeeze. on the margin. the fx market, 1.06. the weaker chinese currency on the dollar/yuan. david: what you need to know. jobs, jobs. nonfarm payroll about what president-elect donald trump said is the most important goal of his administration, he wants to add a 5 million jobs in two years. how many were added last year? it is been a year since the yuan felt this much. -- he wants to add 25 million jobs in 10 years. the volatility after the central-bank rates the rate less than anticipated. tweeting for jobs. he may not be to present-day yet, but trump is moving forward to create u.s. jobs by tweeting

almost daily about companies making things domestically. this time, toyota's turn with mr. trump tweeting a border test on corollas once he doesn't office will be in. that's what you need to know. for more on the numbers coming out and it hour, we are joined by mike mckee. will be live at the american economic association's annual meeting in chicago later. the largest gathering of economists in the world. give us a preview of these job'' numbers coming out. what should we be looking at? mike: a couple of key questions. the impact of holiday hiring. it seems to be later this year. did we get as many retail workers as we expected? a question about the weather's impact, especially construction. people will look to see if there's anything you can tease out that came out of the

election, did employees ramp up because of a change views about the u.s. economy? that may be hard to prove. it's wall flow into the narrative that barack obama created an awful lot of jobs when he was president. you can see where we were when he took over one of the recession was gathering steam and jobs were lost by the hundreds of thousands. he has left quite a legacy. david: that is the barack obama narrative. donald has formed his own narrative. last month when the numbers came out, he say it is fine comfortable what jobs did they grow? look at the wedge groaned and participation rate and we are not getting the right jobs. what will the trump administration a look at? mike: a lot of interest coming out of the administration. donald trump is counted 40% unemployment because he is counting high school kids.

it is hard to know what he is looking debt. participation rate is something everybody is concerned about. a lot of the decline is the fact that baby boomers are retiring. .ess people in the labor force the way just numbers are starting to go up again. that may be something to watch it today because we have a depressed number in november. we will see if you get a rebound in december and it would make them harder to criticize the numbers. what is interesting if he can come close to the 25 million he wants to create. that is 2.5 million a year. that would be difficult to do overstretch of 10 years. at some point, you will have a recession. -- that would be difficult to do over the stretch of 10 years. there is not that many people available to get jobs. david: your hobnobbing with economists. you have several interesting interviews.

tell us about your interview. michael: robert kaplan will join us for an exclusive interview at noon new york time. stuck by what the fed things about the coming year. -- to talk about what the feds think about the coming year. they have no idea how the economy will he thought. about hownt to talk he is going to make those decisions and what the numbers is he looking at and how he thinks about the economy in the trump era. we have david, a nobel prize winner. and robert shiller, interesting together their take. david: a different trifecta. .ichael mckee in case you were not paying attention, he will be live at the american economic association later this morning with a slew of interviews. three nobel prize winners and policymakers. you do not want to miss the

exclusive down with the dallas fed chair, robert kaplan. jonathan: more on what to expect. , chief global economist. great to have you with us on the program. the estimate. what is the headline? president obama goes on a high order trump optimism drives hiring? whose jobs report is it? >> it is split area put too much if this is on the politics. let's look at the economics. the economics is the u.s. labor market has been increasing and getting closer to full employment. you can quibble if there are areas of slack. a lot of progress. jonathan: the pushback, the argument against it is why is it wages higher? why isn't it 3.5? josh feinman: a lack the reaction. response to wages is slow.

productivity is disappointingly sluggish and has impacted wages. and inflation and inflation expectations have been low. more than the slack in labor market. a combination of things. the labor markets continue to improve and we will see the gradual creep up. jonathan: the fed keeps saying it is coming, coming. a famous weather caster one set people are talking about hurricane comic, it may be wendy, there is a huge hurricane -- a famous weather caster wants said people are talking about a coming, it may be windy, later, the is a huge hurricane. josh feinman: it has been happening. it is slow. it is not like wages are not showing any sign, they half.

you see the numbers, two steps forward, one step that. it does not move in a straight line. -- if they half. the sporadic nature of it. it is treated. -- they have. david: i'm not an economist. at one point is a right to say the whole model is wrong? technology may have changed the model it is not just the matter of waiting, we are replacing the jobs with less attractive jobs. as technology has come in, they are taking better paying jobs and that is what suppressing wages growth. josh feinman: technology should boost productivity. it should make workers more productive. aw do we square that with disappointing productivity numbers we have been seeing? that is the problem i have with the narrative. jonathan: how does this payroll informed the said's decision --

though said's -- the fed's decision-making? josh feinman: mabel looked at things in the context. they will put this in the picture. is the momentum continuing? at what pace? what is happening with unemployment rate is important. we had the big drop last month. we will see if it is sustained and what happens to labor participation. it is a pantheon of numbers that the fed look at. jonathan: a real conversation on the f one c about the potential -- foc about unemployment. and undershoot. what kind of levels are we talking about?' : the fed has set the natural rate of unemployment is 4%-5% zone. we are there. continues to generate jobs, it will put

downward pressure on the unemployment rate. it makes it less likely it undershoot sprint it is not terrible if it happens. you want to get inflation back up. itsuggests at some point, keeps going on, the economy, the job growth will have to slow to reverse that. sometimes, that is hard to do. david: we are going through transition permit the new president said he wants to create 25 million jobs. what with that due to the economy overall? josh feinman: i will tell you the mass of it. if the participation rate hold steady, very hard to do given the demographic downtrend. even with a very aggressive assumption about population growth, unemployment rate would have to go negative. mathematically impossible. ok? if somebody offered you a bit about with probably a jobs, take it. -- offer you a bet about jobs,

take it. >> unemployment. >> i don't know. jonathan: josh- feinman. thank you. revenue and $23.8 billion previously sought $25.2 billion. below that at $23.82 billion. the stock is down by 1.5%. stocks lower. coming up -- the flows may be slowing. the active managers will have a lot to offer. what are the trade-offs and what does the trump administration mean? this is bloomberg. ♪

emma: i'm emma chandra in the hewlett-packard enterprise green room. congressman from ohio, tim ryan and how plan debt and how democrats plan on -- and how democrats plan on taking on donald trump. this is bloomberg. 20 16 some massive inflows of funds part of a larger trend going on for some time. most money in actively traded vehicles. we talked with bill mcnabb and he laid out the case. bill: part of the debate is in a sense, focused on active, passive. a better debate as high cost versus low cost. what i think you will continue to see to your first question is a secular change where investors and professionals who are

devising are very focused on cost. us now is somebody believes in the continued need for active investment, john linehan. put you on the hot seat to defend all of the active investing. put us in a case of why active is important right now. john linehan: first of all, investors are not focused on fees but the overall experience. we are proud of the fact that over 80% of our domestic funds have outperformed their benchmarks. if you look at what is going on in the economy today, the significant disruption of is occurring in most sectors and you look at trump now pod tax policy -- trump's tax policy and potential winners or losers and the tweets, almost 2% today, there is a role for exceptional active managers. that know their

companies extraordinarily well will selected the winners and losers in this type of economy. david: and bill mcnabb would say there's a role for active. we'll put up a chart. over the last few years, quite dramatic toward passive and away from active. what are the investors missing? what are investors missing as they move their funds from one to the other? cycle ofhan: there's a performance between active and passive. passive has done very well. .hat will abate there's been very low dispersion of returns among companies over the last several years that play well for passive. market wethe type of believe we will give and the trump presidency, you'll see less dispersion, i mean more dispersion and that plays well under active managers.

jonathan: is that something you have to wait for? be patient for? it is been put in cost of this performance saying it is not so good, i will go lost -- low cost. how long do you have to wait? john linehan: i do know what to defend all active managers but t. rowe. we have to for our supper. you have to be a able to outperform the benchmark. we have been able to do that and we believe we will continue to do that. we believe the environment going forward is more conducive to that. david: let's get active for a moment. specific companies. ok? they have hadd, major deals, a $14 billion buying sky. inof the same time, very big basic cable. a lot of growth under some stress is fair to say print how do see the future of 21st century fox? john linehan: with equity

income, what we are trying to do is look for companies with a good valuation characteristic, strong fundamental dynamics and video and fox was that bill. you have a franchise, fox broadcasting network, fox news for a lot of americans is their source of news and regional sports network. on any sort of bundle, fox becomes must-see tv. with things it -- we think a good strong negotiating leverage. david: let's pick on fox just because such a strong driver. they are after a presidential election. will it be as much must see? they lost megyn kelly who is a big draw and more central issues of basic cable. john linehan: four fox news, they have an identity that no other news outlet really has.

i think that will continue. fox news will be less of a contributor going forward. if with the valuation, it is trading 11 times 2018 earnings. we think it is too cheap. jonathan: do mentioned active and you talked about trump's moves. how active are we talking about given the new administration and what we could see in the coming months? john linehan: what we believe is if you look at trump's tax policies, that will create winners and losers. it will be significant differentiation between them. those that can understand and anticipate the companies that are wehner, that is a real opportunity. jonathan: how do you anticipate that? do not think -- more for throwaway line on the twitter. the policies and regulations is what will drive it. in a are a lot of things

question. understand how companies will react and what their tax will look like and how they pay taxes and how they will respond to regulatory environment is critical to determining the longer-term success. david: a company that could stand to lose a lot from trade is boeing. they are depend on trade with china. if they could get hurt. how concerned are you about things like that? ahn linehan: you have business where there's a strong backlog of orders. where with the chinese go if they decided to cancel orders from boeing? you have a cycle that is going 4%-5%. we are past the midpoint of the cycle. the reports of his demise are greatly exaggerated. , by 3.6% dividend yield that over 6% of their stocks in yearly basis, that is compelling valuation for incoming to managers.

, portfolio linehan manager. thank you for being here. time for other stories. here is emma chandra. emma: thank you. equity traders at morgan stanley are getting a smaller bonus. it is cutting the bonus by as much as 4%. that is according to people familiar with the matter. morgan stanley equities revenue dropped more than 3% in the first nine months. the private equity firm carlyle group is exploring the sale of nature's bounty according to people familiar. as muchany could fetch as $2 billion per nature's bounty include pure protein and met-rx. the world's largest smartphone maker, samsung, posted is the profit that its biggest profit in three years. it bounced back from the death of is a galaxy note seven. the debacle cost more than $6

billion. that's your bloomberg business flash. -- they keeping up was to watch and the december payrolls report. first reaction to the data with blackrock. from new york, 39 minutes away from jobs, this is bloomberg. ♪

jonathan: this is bloomberg. it is all about u.s. jobs. to 5000 payrolls expected to be added to last a month. ,oining us to preview it is great to have you with us. ,onfidence, business, consumer great. is it going to translate? reporter: a big postelection rally in all of the series. we have not really seen in the

data with the exception of vehicle sales earlier this week. it will be the real test of the improving sentiment if it is starting to take hold. athink that we should see decent jobs number and given the fact the economy's performance so much better in the second half compared to the first half could in part have modest upside risk to the number. spirits, which are critical to private sector decision-making, weather business investment or labor investment or hiring will have significant impact on the pace of hiring if not in the december number than early on in 2017. isathan: sometimes economics about simple stories. if it is scarcity, you put up wages and try to tax workers. wages would be a lot of higher than they are currently. where to see scarcity? a narrow array of

categories, but it is becoming less narrow. shortages-based labor . the number of industrial surveys, beige book highlights lots of anecdotes by employers workers.oblems finding the question is when is a will offer higher wages to attracted those workers, it has not been happening yet. i suspect it will be the particle story for 2017. jonathan: one of the standout quotes from the meeting in 2017 was the concept of an undershoot. i can bring you the quote now. and undershooting of the long and if thatment happens come committee might need to raise the federal fund higher. what is the -- what does the potential for it at this point when women not got in the rate you expect?

carl: we do not know what undershooting the neutral until we see wage pressures. earlier on in the cycle, a lot of economists thoughtful employment could be consistent with 5.25% and we blew through that and do not get wage pressures. we got 5% of blue through that it did not get wage pressures. now mid 4% and we are seeing evidence. if we push below 4.6% with unemployment rate, the said will ask questions about the timeline. jonathan: bloomberg intelligence carl riccadonna, great to have you with us. coming up next -- countdown to the payroll report. 34 minutes away. ♪

♪ a warm welcome to "bloomberg

daybreak." i am jonathan ferro alongside david weston. counting down to the payroll report. yesterday, if you switch up the board, was the free payroll squeeze of some of the crowded positions. u.s. 10ed at 235 on the year. is what you need to know at this hour. jobs, jobs, jobs. the nonfarm payroll report is what donald trump says is the important goal of the administration. yuan slips. it has been a year since it felt as much in a single day. volatility came after the bank raised the fixing rate less than anticipated. tweeting for jobs. donald trump is moving forward on his -- creating those jobs by

tweeting daily. turntime it is toyota's with mr. trump threatening a border tax on corollas. we want to come back to the jobs report, less than 30 minutes away from the nonfarm payroll numbers. is here in the studio and from stamford, connecticut is dean maki. thank you for joining us. mr. obama has created a fair number of jobs. what does that do for donald trump and sometimes it is important to choose your predecessor carefully. does that make it more difficult for mr. trump to create new jobs? mr. bandholz: we heard from one of the previous guests that the 25 million jobs requires a negative unemployment rate for people working until they are 80 years old or more immigration.

i think the u.s. economy is basically at full employment and with population growth being slow, it makes it hard to create more jobs because the labor supply is relatively low at this point. david: we have a tendency to focus on the number as opposed to the quantity. last month mr. trump came out and said it is nice to add jobs, but they are the wrong jobs. you are not seeing wage pressure. is that a real issue as a real issue as we look at these numbers that come out? mr. maki: i think we are starting to see wage pressure. today i expect to the average from 2.5% lastp month. if you look at the same worker overtime, they are running closer to 4%. i think we are seeing wage pressures develop right now. jonathan: overtime history tells us that when unemployment is down, wages are usually much

higher. that chart looks different this time around. why is that these think? mr. maki: i think one of the boomerss we see baby retire. jobs that are created are often took -- taken by younger workers that start with lower pay. it is holding back that average yearly earnings number. jonathan: the that mean the fed can be patient? mr. bandholz: i agree with dean. of a need toack get compensation for higher inflation. people were less aggressive when pushing for higher wages because there was no inflation. i think the fed has been too careful for too long and one problem is the core inflation measures. they are biased outward. you have to get back to the big

boom that preceded the crisis. it was not a bubble everywhere. these core inflation members -- measures never flashed to the fed that they are behind the curve. david: as you look at this fiscal stimulus coming out of the trump presidency, how does it affect the job market? what would -- where were those jobs come from and who would happen to pay in a sense? mr. maki: i think what that would do is keep driving the unemployment rate down, perhaps at a faster pace than we have been seeing. we are after near full employment now. it is an unusual circumstance to try to stimulate an economy that is already at full employment. what would happen is the fed will raise rates faster. jonathan: if we are at or near full employment, why are we --ivering growth at 145

145,000. mr. maki: usually we keep running at a similar pace through full employment. wage growth picks up and we are starting to see that happen. we are seeing the start of the process and that will just continue until ultimately the fed has to put a stop to this. barrackarm, we had tom who has been with donald trump -- a little bit on this program and he said big infrastructure spending would create the 25 million new jobs. barrack: infrastructure and tax go hand-in-hand. if you could bring back $1 trillion of offshore capital and tie that to investor tax credits and put them in an infrastructure bank, trade jobs is the easiest place to create 25 million jobs. putting people back to work in

construction on bridges and hospitals and polls, and ports is the easy way up. david: that sounds pretty good. does the arithmetic work? mr. bandholz: i think the infrastructure program at this point is the most worthwhile project because it has lasting effect on probability. unfortunately, it should be financed i public pro-partnerships. we do not know exactly if we get the money together. if the government wants to do an infrastructure project it should be by the government. infrastructure would be great. jonathan: how do you see the 25 million jobs? themaki: i do not think labor force will grow fast enough to generate the number of jobs from here. i think what the goal of any fiscal stimulus programs should be is to raise productivity growth rather than to create

jobs because they think, the more jobs that are created, the more the fed ratchets up interest rates. would thatow long take to achieve and politically is that really an objective that any president would want to take if they will reap the rewards outside of that term? mr. maki: it is a problem of productivity growth. it is slow to change pace. it is the right thing to do, but it does not necessarily show up in the first couple of years. david: i am sure you agree that productivity is key. what about the suggestion that you get people to repatriate their funds and agree to invest, is that a way to get productivity? mr. bandholz: it is great if it works, but how do you really force companies to use that money for investment spending? you can see companies that repatriate the money get a tax break and investors -- that may just crowd out other

investments. i think it is impossible really to enforce or make sure that funds are useded 100% for investment. it is a great idea, but tough to enforce. jonathan: how about all these companies that have funds overseas butter in the debt market. mr. bandholz: cache has never cash has never-- been an issue. if they wanted to invest, they could have done it before. jonathan: as we count you down to the payroll report, let's get an update on what is making headlines. a: russia is taking the first step to reducing military forces in syria. an aircraft carrier is being withdrawn along with several other warships. russia has been supporting syrian troops.

a truce brokered by russia and turkey has been in place for almost a week. president-elect donald trump meets today with the targets of his most recent criticism, chief of the u.s. intelligence community. they will break him on the findings that russia try to influence the election through computer hacking. the directors of the fbi and cia will be at the briefing. the philippines says crime has dropped 32% since the president launched his drug war. critics have charged that the campaign led to vigilante violence. a new poll shows the president with an 83% job approval rating. global news 24 hours a day, powered by more 2600 journalists and analysts in more 120 countries. chandra. this is bloomberg. ?onathan: what are we about 20 minutes and 30 seconds away from the payroll report. we are flat across the board. let's say good morning to abigail doolittle. abigail: after the cell up in

retail yesterday, we have a bright spot. gap shares are soaring after they put up surprising december sales gain up 10%. outperforming macy's and holes in a big way. if say they see the full rate -- full-year earnings modestly above expectations. this seems to give affirmation to the ceo. analysts are saying this is too early to call it the beginning of a big turnaround. another retailer in japan, more kohl's,to macy's and down nearly 7% after they missed same-store sales and blaming warm weather. this is the biggest influence on the nikkei. the specialty pharmaceutical company brought earnings down by 18%. the range is below the consensus estimate of $5.40 per share by as much as 9%.

it looks like competition in the ms space and drug pricing pressure. this stock was down 45% last year and not a great way to start the new year. david: he fought hard to keep donald trump from being the next president. now the question is how democrats in congress will work with the new administration. tim ryan is a longtime democratic congressman from the state of ohio and he is with us next. this is bloomberg. ♪ ♪

jonathan: this is "bloomberg daybreak."

about 16 minutes away and 10 seconds from the payrolls report. we look like this. futures negative five. negative two on the s&p 500. a marginal move by the -- to the downside. what a move we saw yesterday in the bond market. a real squeeze for some treasury shorts. yields down to 234. down as well.sion .2%re back below that, down . every single morning a weaker chinese currency. that one shocked overnight as well. david: representative tim ryan has been a democratic congressman from ohio for 13 years serving on the appropriations in budget committees. he has been a staunch advocate for strengthening u.s. manufacturing. something he appears to agree with president-elect donald

trump on the we campaign hard to prevent the presidency. welcome to the program mr. congressman. rep. ryan: thank you for having me. david: you have distinguished yourself by being you will not be someone that says never trump. at the same time you will pick your spots and if you disagree you will say so. talkryan: there has been of an infrastructure bill. i think that would be very important -- appropriate. ,e is talking about $3 trillion that would be appropriate. i do not want it to be the trump works version of university. it has to be money going into the communities, broadband, something that will put people back to work and change the trajectory of the company. we want to do advanced manufacturing, but we do not have the broadband capacity to even download the files to be able to do the work.

those of the things i am looking at and if you he is going to go down that road and pay for it, i will be there to help. you suggest a lot of your home loan years participate in the manufacturing industry and these are people that feel they have really been hurt by international trade. would you be inclined to go along with him and put trader stricken sin -- trade restrictions in? rep. ryan: i have supported fieldrestrictions on dumping, anti-dumping provisions. i think those are important components of the power of the presidency. to be able to do that to protect the market when other people are cheating. my concern is donald trump has not gotten to the details. i know we are at the beginning and that is why i will give him a chance. i have watched factories close in places like war and, ohio move over the -- places like

ohio move over the border and ship things back. just slapping on tariffs, for example products coming into the chevy cruz will raise the price of the chevy cruz and may encourage retaliatory measures from the mexican government and reduce exports. i am just saying we need to sit down and be thorough as we do this. it is not going to happen in 140 characters on a tight. -- on a tweet. if we are not careful it could cost jobs. we have to be careful how we do it. david: to paraphrase, potentially with the new president's infrastructure -- we will wait and see on trade. what are the things you look on that you think you would have to fight against him on? rep. ryan: if he is going to pass a tax cut that will be primarily geared toward the

wealthiest people in the country -- i do not hate people who are rich, but the fact of the matter is we have the highest level of income inequality in a must the history of the country. we have the bottom 90% of the people seeing no income gains in the last 30 years. if we are going to continue to go down this road and take a tax 10%,or the top 1% or 5% or and blow a hole in the deficit, i do not think that would be smart and i will fight him on that. if he gets crazy on the immigration stuff, like the rhetoric he was pushing in the campaign, i will fight hard on that and i think that would be a economy.the we have to rebuild the country and figure out how to get manufacturing back into the united states. we need to throw gas on the maker movement. if a -- if he gets his eye off

the ball, i will fight him. a lot of people voted for him and voted for me. a lot of people who voted for obama twice, voted for him. if we respect the process, we have to give them the -- give him the opportunity to say what he needs to say until the budget hit congress and then make decisions on the numbers and policies he presents to us. david: another thing the democratic party is thinking about is where it goes from here. a lot of people who voted for donald trump are the union people who traditionally had gone democrat. these are your folks. i am from michigan, i know them, too. what can the democratic party due to recapture those people as it tries to reinforce the leadership? as you said before, you lost in that has to tell you something. rep. ryan: we did and i think a lot of it is unnecessary policy. we talk about broadband and

driving defense manufacturing money into communities. these are important things. the democratic problem has been, we slice to the electorate up. we have women, white people, black people, straight people, catholics, protestants, jesws, and we talked to them in those lanes. we talk too much about the minimum wage, but not middle income wages. that message. off that is the message that unites all of those groups and the big 10% of the democratic party. we do not have to back down on issues of equality. we need to fight hard to make america and inclusive place. messagethe most robust from the democratic party -- it has not been the economic message and that is what i am trying to do and redefined the party. david: thank you so much for joining us. that is representative tim ryan

from youngstown, ohio. jonathan: shares of jcpenney moving lower after they reported stores duringe the holiday season. stock down by 2.34%. -- 3.82%. the impact of the numbers on the dollar and the fed rate hike path. we will discuss that from new york. this is bloomberg. ♪ ♪

jonathan: from new york city, this is "bloomberg daybreak." aheadage is set like this of the payroll reports, futures negative by down about .1% on the dow and s&p 500. treasuries had a big rally yesterday, the biggest since the days post-brexit.

the stabilization at 625 on 10 year. largely a weaker dollar story in the g-10 . david: time now for the morning meeting and we hear what key banks are looking at right now. we are joined by brad bechtel. given the fact that we will have job numbers in just over five minutes from now, we have to ask how might the job numbers affect fx, and the u.s. dollar. mr.bechttell komal -- el: we have come a long way from the highs in dollar-yen and the lows in the euro. we get a good report today. we have a headline around 195, isch is what jeffries expecting. that could put a bid back into

the dollar and hopefully reverse these losses. in the dollarh weakness has been because of underlying fundamentals and how much has been in the marketplace because there were so many longs they had to come off of? a big part has been the trump affect. but also, a large part is nextng in hikes by the fed year. they see upside risk to the economy and the market rallied in the dollar rallied on that basis. lately we have had doubts on what will trump achieve in the first 100 days. will he get as much as he wants done actually implement it or not and i think that has taken the steam out of the dollar. also you have issues in china with the cmh and funding pressure in the -- volatility in the funding space. flight that has caused a

into the bond market and that takes pressure off the dollar. rates on the see dollar most dramatically in the dollar-yen cross? to bechtel: it is tied dollar real rates. it will move in lockstep typically with those rates. prime example of that. as the dollar was rallying, dollar-yen was getting hit. the correlation to rates in particular is quite strong. david: if we get to a world where we are not quite as dependent on rates and looking more at underlying growth, what cross will that show up in? mr. bechtel: it will still be dollar-yen because in that environment you will have u.s. and puttingg higher pressure on dollar-yen higher because of japanese are still pegging the 10 year on their side at zero.

you still have that dynamic in play. euro-dollar will be affected by that as well. pretty much it dollar across the board and emerging markets in particular will also start to be impacted by the uptick in growth in the u.s. side. jonathan: the dollar strength -- the euro, much the pound. yesterday was the opposite of that. it has been described as a big squeeze for the crowded longs of the dollar. what to you identify in the weeks or months ahead that say it is more than just a squeeze? mr. bechtel: if it is an inflation point back to lower, it will be a reflection of what happens with trump and the policies he is proposing. to the extent there are delays or we do not get the stuff he wants done done immediately, that will put pressure on the dollar to the downside.

to the extent we see things implement it rapidly or better than expected or even as expected, the dollar will rally. we are at a big inflection point that i think will be hinged day and theuration first 100 days to define the dollar will go for the year. jonathan: central-bank intervention, how big a part will that play? we have mexico intervening yesterday and the chinese intervening. how does that factor in? mr. bechtel: in many ways central banks are just trying to contain the moves. to the extent of the dollar , if the speedally of the move is to click, the central bank will try to slow that down and try to calm the markets. a lot of that intervention is about stability. they would rather have stability and orderly moves, even if it is weakening. that is what they are driving

for. i see that continuing and to the extent of the moves get fast, then they will become more aggressive. david: thank you so much for being here, that is brad bechtel. following the data on the jobs tlivego.go to jonathan: 57 seconds away from the payrolls report. let's whip through the classes. negative one point on the s&p 500, call it -.1%. yesterday, big squeeze of some of the treasury shorts. the biggest rally in treasury and the biggest fall in yields since the days post the brexit vote. in the fx market come all about dollar strength. the dollar getting towards highs we have not seen since december 2002. yesterday a story of dollar weakness, a squeeze with dollar longs.

today, the dollar is stronger against much of the g 10 space. 175,000, that is the estimate of the bloomberg survey. the number comes now. >> 150 6000. below the estimate that jonathan mentioned. in the unemployment rate as .1%.ted picking up average earnings coming in hotter than estimated. 0.4%. year-over-year gains, 2.9% matching the highest rate since june of 2009. a little more wage growth even as the total job gains were lower than estimated. the participation rate is something we have been watching steady at 62.7%. this means total job growth in 2016 was 2.2 million, the six

straight year of a growth of 2 million jobs or more, the longest streak going back to 1999. the average work week unchanged at 34.3 hours. where were the gains coming for jobs? biggest gains in health care, social assistance, restaurants and bars, and transportation and warehousing. a lot of careers ferrying things around. a gain in manufacturing. where were the losses of jobs? losses in mining and logging, construction down 3000, the first drop since august. information, media and publishing, the entertainment injury -- industry as well. the biggest drop was temporary health services.

that seems to be a volatile number. the household survey is revised annually. there were two revisions in the year, down -- revised down to 4.9%. of those of the details initially, 156,000 jobs added to the u.s. economy last month. jonathan: much more from julie hyman throughout the program as we get you up to speed. we were looking for 175,000. wages at 0.4% up. 2.9% year on year captured in a market like this. go straight to the front end of the yield curve and through the belly it is weakness, two years selling off and five years selling off. yields up about two or three basis points and that follows from the bond market to the front yard the of the yield curve through to the fx market. -dollard by the euro cross. now down by .6%. a stronger dollar day with

weaker session for treasury emerging. if you pinpoint one data point, you are looking at wage growth at two point 9%. weakness for treasury strength for the dollar. david: i would say not a shocking set of numbers is my preliminary reaction. we were expecting softening of jobs and some take up in wages. i would also notice there is a big revision in the last month and went up to 200 force-out -- 200-4000. jonathan: if you look at what it would take to -- full employment -- 150,000 is a solid jobs report. a market on the move in a big way. yesterday was a big squeeze for treasuries. we reversing -- we are reversing some of that with yields across the curve. atid: average weekly hours 34.3, down just a 10th from before. it will not be to disappointing

as we get to jason furman. jonathan: who writes the headlines? who is this down to? david: exactly. now we go to bloomberg radio where tom keene will speak -- tom keene and david gura will speak to bill gross of janus capital. >> let's start by taking stock. president obama in his last two weeks has been counting his achievements with regard to the labor market in the memo yesterday. give us your assessment of how market lookslabor today under the tenure of president obama. mr. gross: he has done a fine job from where he started eight years ago, down at 4.7% unemployment as i remember to a 10%.9% or close

the labor market is improving. in contrast to what jim glassman said, the underemployment rate is relatively high and needs to come down by 1% or 2% because we are talking about the labor force that wants to work as opposed to the -- number. it is a decent number and gigi -- suggests gdp is moving along. to get a healthy economy, trump suggested a strong economy needs 3% real growth and 5% nominal growth. -- a point under for both of those. crucial if we are to see a lift in the animal spirit. do you tilt toward it will be an or will beift

actually see real economic growth over the next year or two years? mr. gross: i think some of both. it is hard to know. we do not really know what the program will be. trump is suggesting a trillion dollar program. that is half a percent in terms of fiscal spending. we have seen inflation with of these numbers and wages go up by close to 3%. i think some of both. i think what is critical is the productivity number, total factor productivity gets a little complicated. what that speak and means is you cannot just throw resources at the economy like trump may do in terms of fiscal spending. you need to throw productivity at the economy. resources that produce growing productivity as opposed to just more resources.

we are going to have to see about that. that is the crucial number. an interesting time and a time where we could do a six-hour interview with you. maybe we do that if my people talk to your people. the basic idea is there is investors to interest rates. and thenreflation there is a lot of people talking about, this is great, but we are going to roll over to a new lower rate regime. some of that because of international affairs. janus unconstrained fund banking on? mr. gross: the slightly higher rates -- i will introduce a new factor that i know you are interested in because you are a technician to a considerable extent. there has been a 35 year trend the since 1984 or 1983 on

10-year. moving down perhaps by 30 basis points a year. the downward trend line being times in a 7, 8, 9 cyclical fashion. that is around 2.6%. . would say this it is hard to know what fiscal spending will do in terms of real growth and inflation. it is hard to know what other countries and central banks will do in terms of quantitative easing, etc.. we will not know it if the 10 monthlyaks 2.6% on a basis because it is strong important -- so important in terms of analysis. if it is not broken on the upside we stay where we are. tom: and this is important, this idea of finding a point estimate

of where things are. thereoss says 2.6% and are other opinions on that. it is nice to hear a point estimate. david: let me hear you if we see a recalibration of estimates. we see the exuberance in the market at the end of next year -- -- dear. we see republican lawmakers laying out agenda items. will there be a healthy dose of realism over these next few weeks? mr. gross: i think there should be. we do not know what the fiscal affect aill be and the year or two years from now. we do not know what the health care reconfiguration will be or where the money goes or where it comes from. i think there is a touch of realism. what i think investors want to see is a standard 3% real growth rate which will induce profit

growth. with wages up at 3% it is important real growth is up by 3% so corporate profits can particular -- participate in that run. we will need those types of moment -- those types of numbers. we have 1.9% for the last 12 months. can trump produce a 3% number and give some to profits and some to wages? we are just going to have to see. i tend to be skeptical are in i pet -- i tend to be of the stagnation, low hanging fruit, new normal type of persuasion. we will see if fiscal spending can get us up there. jonathan: that was janus capital's bill gross. we will dig further into the jobs numbers. fresh reaction with blackrock's rick rieder coming up next. this is bloomberg. ♪

♪ >> this is "bloomberg daybreak." i am emma chandra. coming up we dig into the jobs report with mohamed el-erian and rick rieder. jonathan: this is "bloomberg daybreak." i am jonathan ferro. , aturing the jobs story downside on the headline number. futures are flat. switch up the board quickly. in the bond market, treasuries up. a dollar gaining strength as well. david: for more on the jobs data mike mckee.d by

he is out in chicago and will come live from the american economic associates annual meeting there. the meeting is the largest gathering of economists in the world. we keep saying that in case people do not know. it is a little daunting. as you look at these numbers, a pretty sizable report. if you were going to quibble with something, some puzzle or disappointment, what would you find? couriers, you look at the people who deliver the packages for amazon, not as much hiring as you might have expected given what we know about retail sales so far. that might be a little but of an odd point -- a little bit of an odd point. we could see a revised. the november numbers were revised from 19,000 to over 20,000. we could see a revision to these numbers. that would be the outlier.

weight growth very strong, the strongest since 2009 and that gratifies the fed decision to raise rates and consider the past they are on depending on what donald trump does. one last point i would make on is the overall number of 156,000. don't believe anybody that tweets that is a bad number because the fed estimates you 110,000 to5,000 to absorb the incoming. jonathan: i can't think of anybody that michael is talking about. david: thank you so much. michael will be live at the american association economics meeting this morning with economists and policymakers. do not miss his interview with robert kaplan today eastern time at noon.

jonathan: we hear more from janus capital's bill gross on the jobs -- this is bloomberg. ♪ ♪

david: this is bloomberg. i am david westin. we will region -- rejoin bloomberg radio. tom keene and david gura talking with bill gross. tom: we welcome bloomberg television worldwide and bloomberg radio and we continue our conversation with william gross. everyone wants to know what you feel about trump economics and trump's theory, particularly through the prism earlier this week from lawrence summers, the former secretary of treasury. larry summers was fiery talking about the voodoo economics of a selected group of trump advisors, even calling it

-- creationism. is it on solid theoretical ground? mr. gross: on a short-term basis, perhaps. i think that is what larry summers was talking about, creationism is sensitive, but we know about video economics. some of the policy initiatives -- the tax cuts for instance that will generate more revenue. we have heard this before. he is criticizing that and also talking about repatriation of money, $1 trillion or $2 trillion coming back to the economy and regenerating investment, typically and historically back in the early part of this century, 15 years ago with bush, it did come back and reduce at the rate. it came back and was used for stock buyback and mergers and acquisitions, not for investment. i think there is a lot of new do in terms of tax policies, not --

i think there is a lot of voodoo in tax policies, not necessarily fiscal spending. had an enormous influence with other nation's debts. ,ou knew about mexico's debts poland's debts. are you concerned that trump economics will lead to a zero-sum world? mr. gross: i think there -- that is a possibility and let's not put odds on it and go to extreme . it is a possibility because the world in total, talking about you merging and develops is that 350% of debt to gdp is the highest it has ever been. why is that such a negative? in certain company -- country's terms, to the extent they have a

high amount and a growing amount that --ominative dollar-denominated debt becomes more and more difficult and could potentially create a situation where certain countries have to be bailed out. i am not suggesting that for mexico, i like mexico. it is a problem where you get in balances in terms of debt. look at debt to gdp and therein lies the problem. david: there are plenty of people who would like to see you on twitter and it may be the president-elect to gets you to do it. he has been talking about companies and the relationship with mexico. as we try to navigate all of this uncertainty, are we getting the contours of a trade policy from what we have seen from donald trump this week? mr. gross: we are about to get

-- or we are getting what we are seeing in terms of tweets. i think it is interesting that some of these preterm policies, he is not in office yet, where it -- he is basically cajoling companies to move production back into the united states. i think that is fine, but it reminds me to some extent of policies in italy long ago associated with mussolini and government controlled corporate interest. i do not want it to go too far. tom: mr. gross, i have to interrupt. this is too important. are you suggesting that we are seeing a fascism like or new form of neofascism with the policies of our president-elect? mr. gross. i would not go that far.

i do not want to call it fascism i would not dare calling it fascism. me of the policy long ago, which were supposed to make trains run on time and did for a few years, but ultimately, the trains were not running. david: let me ask you about the role of the federal reserve in the new term. i wonder if we see a third mandate here. we have the prospect here for a radical transformation of the fed. five new people could be joining the fed, including a chairperson in the next 18 months. what kind of person would you like to see running the fed? how do you see it changing under president-elect donald trump? mr. gross: my favorite policy in

terms of the fed, the central bank is to move interest rates back to as close to normal as possible without threatening the economy in terms of high real rates. the question is what is the appropriate new neutral rate that will make of the economy chuck along at 2% or 3%. i would like to see someone who is more interested in raising rates and producing a neutral interest rate because i think ultimately the last several years have been destructive in terms of where they have been. negative interest rates around the world basically have been robbing savors of their ability to save, which has robbed investment and ability to grow in terms of economic terms. fed andwant to use the the u.s. as a leader to raise interest rates to more normal levels and regenerate savings.

tom: we have so much more to talk about this morning and time is short. help me with the theme of the butterfly effect of em currencies which have a curve and acceleration to weakness. how do you position and think malaysian,undly weak turkish, the mexican peso breaching into weakness as well. what should that signal to the new administration? mr. gross: those are all different situations. turkey is a basket case from a number of angles. let's pick on mexico. every time donald trump tweets about a car company moving production back, the peso weakens. i would look at a longer trend pesoin terms of the real inflation-adjusted and point out that it is perhaps 45% to 50% --

jonathan: that was janus capital's bill gross with david gura and tom keene on bloomberg radio. let's get you a recap of the labor report. payrolls, a slight downside .urprise at 156 k looking at unemployment at 4.7%. average hourly earnings at 2.9%. you get to the markets and you see the fallout in the bond market. that is equity. treasuries very much across the curve, up six basis points. next up, mohamed el erian. ♪ ♪

jonathan: good morning and

welcome to "bloomberg daybreak." i am jonathan ferro alongside david westin. 30 minutes away from the open and 30 minutes since the payrolls report. andres up .1% on the dow s&p 100. switch up the board and look at the bonds are down and yield are up six basis point at $240 on the u.s. 10 year. david: this is what you need to know. the u.s. gets the job done. u.s. employers added 156,000 jobs, sending job gains above 2 million for the sixth year. hourly wages are up the most in over seven years. slips.n it has been a year since it fell this month and a single day. volatility came after the central bank did less than expected. foring for job -- tweeting jobs.

donald trump is moving forward .n his task to save u.s. jobs this time, it is toyota's term with mr. trump threatening a quarter taxon corollas. basicallyfter the in-line jobs report for december, the slightly bad news that the jobs added missed the survey. the great news is wages increased by the most since 2009. with performance on last year, seven out of the last 12 months of last year we had the s&p 500 trade up or down less than .3%. the average move was about .6%. the performance for the s&p 500 last year supports that we may move allt see stocks that much today. we have a big news and ugly news in retail. the gap trading higher on a

sales beat.ember's there was shrink in old navy. as for ugly, looking at jcpenney and 4%, joining macy's holes. sales were disappointing dragged down by women's apparel. the retailer of calvin klein plunge -- plunging after they announced a fourth quarter on a week holiday season. they cut their 2017 review citing warm weather and slow mall traffic. jonathan: the payrolls report wraps up 2016. theoll growth coming up most in the current expansion come a decent solid payrolls report. with juliento it hyman. where did the strength come from? abigail: the biggest --julie: the biggest gains were health

care and social assistance, things like child care and rehab services. double digits there added. also gains in restaurants and bars and transportation and warehousing. it is notable there was 17,000 jobs gained in manufacturing. i was curious to look at the auto numbers. michael mckee prompted me in that direction. we saw a gain of 2.9 thousand -- i should say 2900 of the jobs in december gaining. that means a total under the obama administration of 933,000 give or take, which is a steep since 2009. that was when we saw bankruptcy in the auto industry. something the president-elect focused on, it is interesting to look at the numbers in perspective. there were losses in jobs in mining and construction.

information including media, and temporary health services. the big number is number, 2.9% year over year. matching the best since june of 2009. numbers. decent jobs ising in at 2.9% for wages solid. david: let's bring in two expert. we turn to danny blanchflower, part of the npc over the bank of england and mohamed el-erian, the chief economic advisor. there -- they join us on remote. let's go back to the days of fdr and remember the song that was the song "happy days are here again. when it comes to the u.s. labor force, what point do we declare victory and retreat?

mr. blanchflower: we are at 59.7 today and 59.3 at the start. i think we are a long way away. everyone keeps saying we are at full employment. if you do that calculation, it is somewhere between 7 million and 9 million jobs below where for employment -- where full employment is. you can look at this in another way, the unemployment went up by 120000 and there were two other wage numbers, weekly earnings went up 2.3%. of the one i really like to look at is the one for blue-collar workers, production and nonsupervisory, their weekly earnings pay growth was 1.9%. there are some positives here. you have three wage numbers you can look at. 2.9% is the headline. 2.3% for weekly earnings, and

then this one for the ordinary person at 1.9%. i think we are a long way away from happy days. look at the employment rate. in 2008day and 63.3% and that is the reason why the heartland is hurting. david: it sounds like danny may be applying for a job in the trump administration. where are you on the question of how many more jobs we need to be creating? mr. el-erian: what danny is saying is important and combine that with what you have been saying earlier. this is a cyclically robust labor market, but a challenge labor market. we are soft landing to about $150,000 to 160,000 jobs a month. structurally, whether you look at the employment to population rate of that danny mentioned or labor participation, we are

challenged and that speaks to the need not just for cyclical stimulus, but structural measures. jonathan: cyclically robust and structurally challenged, does the fed have a role to play here? mr. blanchflower: obviously the fed has a role to play. it will try to coordinate itself with fiscal policy. ,f there is a big, fiscal burst which sounds possible, then this is an opportunity for the fed to raise rates. in reality, you would like down the road when the shock comes, we are nine years into this cycle, then you would like rates to be able to cut. mohamed is right, there are fundamental structural problems we need to deal with and the reality is this complete the klein in the employment rate has not been seen in any other country -- complete decline in

the employment rate has not been seen in any other country. the employment rate has fallen in italy, but they have an unemployment rate at 12% or so. we have not seen this a nomination -- phenomenon in the u.k. or any other structured countries. it will take a while. when you talk about structural things, what you mean is this will take a while. mr. el-erian: absolutely. mohammed is right, let's turn back to him. once to try to fix the structural issues -- donald trump wants to take a whack at the structural issues. mr. el-erian: i think infrastructure in tax reform, these are all important, but they need to be complemented by skill acquisition, labor retooling, working on the

functioning of the labor market. i think that is really important, the functioning of the labor market is how you get to structural issues and that speaks to long-term elements. that is not going to happen overnight. the signaling that we are moving that way can be important. employment report that will encourage the fed to hike at least three times next year. beyond beinge short-term data dependent and become more strategic, specific -- especially so if we get structural data -- jonathan: there is a five dollar bet that needs to be paid from professor blanchflower to mohamed el-erian. talk me through why you oh him five dollars. mr. blanchflower: we had a bet last december that the next move of the fed, i actually thought

it would be down and he said it would be up. on air, i have to admit, i owe you mate. if you are in the studio i would have to pay you. owe youe dollars -- i five dollars. jonathan: a special thanks to you joining us to break down the labor market. mohamed el-erian will stay with us. for an update on the news outside let's get to taylor riggs. taylor: intelligence officials will brief donald trump today about what they say are attempts to influence the election by russian computer hacking. donald trump has already publicly challenged the findings. he will be briefed by the heads of the cia and fbi and the head of national intelligence. russia is taking the first step to reducing military forces in syria. an aircraft carrier is being withdrawn from the waters as

long -- as well as several other warships. russia andkered by turkey has been in place for almost a week. diplomatic slack has arrested over a new statue that commemorates korean sex slaves that japan took during world war ii. the new statue is located near a japanese consulate in south korea and japan is recalling the ambassador in protest and suspended currency swap talks. global news 24 hours a day, powered by more 2600 journalists and analysts in more 120 countries. i am taylor riggs. this is bloomberg. coming up, the coming up, the d rhetoric between the united

states and china is heating up. we will take a look at how investors are translating the back of fourth -- back and forth of the words into their strategies. the ceo of black rock, rick rieder, will be joining us. this is bloomberg. ♪ ♪

jonathan: from new york, this is bloomberg. about 45 minutes ago got the payrolls report for 2016, wrapping up another payrolls --wth north of 2,000,004 a 2,000,004 the last six years -- 2 million for the last six years. onlight downside surprise the headline number. looking at a 175,000 number and it comes in at 156,000.

futures ahead of the open up about .1% and now largely flat. the action is in the bond market. welluries yesterday really bit. 240 on a u.s. 10 year and the dollar showing strength across the g10 space. the figure everyone looks that is what is happening with the chinese currency. the rhetoric between's -- between u.s. and china continues. how are investors taking trump's rhetoric on the country? we spoke to tom barrack. mr. barrack: long-term planning for u.s. investors is 30 days 30 short-term for china is years. thinking that the short-term ebb and flow will affect the vision or philosophy is a mistake. countriesity of both

needing each other is evident. jonathan: mohamed el erian, the chief economic advisor is still with us. there is what is happening with -- fx market as it bubbles away and the back-and-forth. let's begin with the fx move. what do you make of the current gyrations and why should be be less worried than six months ago? mr. el-erian: i think it is notable when it is the off the bull market that leaves and drags -- optimal market that leaves and drags along and that is what happened. this happening differently year. in general, and this is important because this will be a very volatile period. you have the e pollution of privatepolicies, the sector that has become more

sensitive to what is going on inside and outside china, and you have trade relations. we are in for a period of volatility and it will manage -- challenge the way china's manages the exchange rates. jonathan: i am wondering why we are not seeing the bouts of risk aversion we saw this time last year. at el-erian: if you look bitcoin you will see lots of moves. i think there is so much going on at that is being repressed by the fact that the market has largely still bought into the reflationary trade. when it looks at short-term data, policy pronouncement, there was still a view that we are in the period of reflation. if the political noise we have seen of the last few days continues, i think that view of reflation just around the corner will be requested. politics will be area important

determining what happens next. david: today we have job numbers and tomorrow we find out what is going on with the foreign reserves of china and there's a lot of talk of 3 billion -- $3 trillion being the magic number. is there some impetus to make sure they keep it at $3 trillion? mr. el-erian: i think that is an important number because of what happened recently. evidence of capital leaving china, the central bank having to tighten regulations and guidelines on capital flows, question marks about trade relations. is symbolism in the $3 trillion number the cousin of what the private sector in china may do. over the weekend, that will be a very important number and will influence how we open on monday. david: he will stay with us

because now we talk u.s. treasuries. we will get mohamed el-erian and rick rieder and what their take is on what is going on in the treasuries market. this is bloomberg. ♪ ♪

jonathan: from new york city, this is bloomberg. let's get a look at the bond markets. yields are up across the curve. or 4% on theto 3% year. wage growth coming in hotter than anticipated at 2.9% year on year. the median effort -- estimate on the bloomberg survey was 2.3%. rader and -- rick

reader and mohamed el -- rick reader and mohamed el erian still with us. rick, great to have you with us. bearish for bonds,. right now looking at this report. mr. rieder: people are focused on the hourly earnings numbers. it is the highest since 2009. he is still have not gotten the minimum wage kick in and the whole part of the economy that pivots off of that. number, is it a 2.9% but it will get higher from here. a continuation after yesterday 's, we talked about yesterday's amazing move. a continuation of the trend we have seen. jonathan: to bring in the amazing move from yesterday, an amazing squeeze of the treasury shorts. the fundamental versus the technical for treasury. walk us through it. mr. el-erian: i think we are looking at a fundamental level for now of the 10 year around 245 to 250.

i think the market will price in higher wage inflation and the possibility of free rate hikes, which the market does not embrace enough in my opinion, and fiscal policy. i think the last two days were werexception and where we before, will probably be more like what is ahead of us. david: at what point do we become concerned at the tightening circumstances affecting the underlying economy? mr. el-erian: i do not think we are there yet. i think there is enough going on away from monetary policy. we are coming from a period monetaryover relied on policy and what we see is a rebalancing of the macroeconomic policy. my major concern is not the u.s. , my major concern is what happens when you get more divergent policies and divergent economic performance. the number i look at every more -- every morning is what the dollar is doing.

the thing the market should worry about is the dollar strengthening to quickly and too much. that is what could derail us. jonathan: put that together. he have the financial challenge in the market coming through and tightening aggressively and putting downward pressure on inflation. those two things collide and what happens? mr. rieder: first of all, i think it has to play out. i think the overlying thesis that is the most important is the dynamic has changed and per movedohamed said, we have . we have been in a good recession for a number of years and you are starting to emerge from a good recherche and -- recession and that means we can reflate and the system is reflate inc. and my sense is the dollar will continue to appreciate. i think the markets get tunnel vision over the rates have to go

higher and the dollar has to go higher. you have some of that trade off. i think the primary thesis is we are in a different dynamic with better inflationary -- david: mohamed you wrote the book only -- the book "only game in town." mr. el-erian: i think we are closer to the -- it reflects the underlying tension and -- of havehappens when you noninclusive growth for a long time. we are getting closer to the -- turn becausebraced of announcements. whether we get there will depend on design and implementation.

still pretty equal probability as to where we come out. jonathan: we really appreciate your time. mohamed el erian, alliance chief economist and he leaves bloomberg five dollars cheaper from day blanchflower. markett you down to the open. the market, looking at futures ahead of the cash market open. open. take a look at treasuries. yesterday, big rally and today we reverse some of that, up six basis points. the dollar showing some strength as well. all of that ahead of the cash open. the opening bell is next. this is bloomberg. ♪ wow, x1 has netflix?

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♪ grace and frankie, hemlock grove, season one of...! ♪ show me house of cards. finally, you can now find all of netflix in the same place as all your other entertainment. on xfinity x1. anything with a screen is a tv. stream 130 live channels. plus 40,000 on demand tv shows and movies, all on the go. you can even download from your x1 dvr and watch it offline. only xfinity gives you more to stream to any screen. download the xfinity tv app today. we are about 25 seconds away from the cash open. a market future on the dow.

we track those major indices at the moment. on the board very quickly and we will bring you the attention from the other asset classes. one of those crowded positions is short treasury. a treasuryt was rally, today we selloff with six basis points and 241 on the back of a hot growth coming off of the december report. yields selloff on the front end and go higher. you see that captured by the euro against the dollar. down about 7/10 of 1%. let's wrap up the trade in week and get friday started. abigail: that was a great cross asset write-down. we are looking at small gains for the major averages. away.w about 100 points

the nasdaq on pace from a -- on pace for another record close. pacehree outages are on for another weekly game. not surprisingly this bit of risk on field is showing the minors trading lower. stocks are in favor. this is weighing in on new mining. now taking a look at travel related stocks. payroll has reported wage growth is a best since 2009. .he timing could be positive there are some offsetting factors. we will have to take a look at whether americans can turn this around on the day.

jonathan: it is the payroll support. we sell 156,000 jobs added. it is that wage growth that everybody is talking about. put all this together, six straight years of job gains. that's quite a recovery. : something you would not have predicted six years ago. jonathan: mohammed made a comment about this story. the fed thinks they are going to have rates at the end of this year. start to fully price and the potential? guest: the market has not been expecting the fed to move for a long time.

i also think there is a dispersion across the fed that yellen moved is much as the rest of the committee. do think what is going to play out is the economy is going to be stronger than people think and the fed is going to get there. it will take a period of time. think you are going to see a fed with accelerating inflation dynamic. >> the curve is completely repriced. what is most vulnerable right now? >> we had a dynamic where we talked about where the curve should flatten. today rates are

going to move higher. i think the area that we are looking to protect ourselves in the long end of the curve in terms of accelerating reflationary dynamic, people yout realize peak to trough had a 7% move in the treasury market. highest asset classes, incredible pressure. people have to think about going forward, volatility, potential pressure on the back end of the yield curve. and you have to protect were backend yield exposure is. the small move in interest rates can play big in price action.

>> how do you create a dynamic that creates more diversification. parts of the world where rates are not going to move up so fast? owner more of high cash flowing assets. create positive performance. you have to be really thoughtful where your exposure is and more so today. >> let's talk about the bullishness. euros -- 1.25on billion euros. much or you would have expected it that big.

guest: spreads are tight. people are looking at where the opportunity is in the italian market. quite frankly you are taking a lot of the value out of these market. where are these valuations and where can i continue to get income going forward? we think levels are high. however you are still going to carry west. we think having yield in the portfolio will work for you. there are a few things. flexibility, part of what unconstrained means is you can use more tools than just duration. why did we actually make money

in the last two or three months of the year? the ability to manage exposures and not just have a one-way bet on interest rates. make sure you are pivoting to fixedthe opportunities -- income is going to be part of your portfolio. differentgoing to be with rates at zero or negative. >> we will have more with the creator of blackrock. and he joins us from the white house. jason, we have been talking about jobs numbers. the markets see this as a bullish job number.

give us your take on these numbers. guest: i'm looking at the last eight years of data. shattering the previous record of 40 straight months of job growth in the late 1980's. way below what anyone would have thought a couple of years ago. of this is translating into wage gains. seen since we have the financial crisis. >> not to take anything away from that -- are you all concerned -- are you at all concerned about the you six number? fell -- >> it fell.

part-time forking economic reasons and there is more room for that to come down. in terms of the participation rate, that has been rising for the last couple of years, as people are coming back into the workforce to get jobs in the next -- in the stronger economy. there is a longer-term factor there. there may be more room for that arise. overall i think the labor market has been exceptionally good over the last eight years. >> as we come to the end of the term of president obama -- cyclically this looks good but there are long-term structural factors that need to be addressed. do you agree with that?

>> absolutely. we made a lot of progress on the health care, we are producing the same time because of fuel efficiency rules we are consuming less oil, so we are far less reliant on foreign energy. our financial system is much better capitalized and in safer shape. progress,ructural absolutely much more than needs to be done. kenexa gains with workers with higher minimum wage. gains withthe workers with higher minimum wage. >> as we leave you, what comes next? do you go to disney world? guest: i'm going to continue researching, writing about the same set of topics i have done

for the last 20 years of my life. month'se reading next jobs numbers with interest. i will have to wait until it: 30 a.m. like everyone else. he can be in his jammies and watch from his bed, a nice deal. >> coming up, more on blackrock's bond stretch with rick rieder. this is bloomberg. ♪

this is bloomberg a break. mike exclusive

interview with robert kaplan. >> as we wrap up the trading week, potentially a week of gains. a minutes in down about quarter of 1% on the down but only once at the s&p 500 crossover to abigail little. abigail: bonds are selling off last three weeks, this is a three-week chart of the 10 year yield you see a decent decline 14 basis points. the 10 year yield has been down three weeks in a row. the longest down streak since july. that massive move up higher in the last quarter, about 85 basis point. there is reason to think the down trend, the more nascent

near-term downtrend could continue. in white we have the fed prefers measure elation personal consumption expenditure. sharp down it took a to create this could explain what did talk about the idea of whenng rates gradually you we look at an incompletion measure in purple and in blue 10 year yield, that area suggest a divergence could match the piece he and we couldn't back seat 10 year yield slide. this suggests we may not see bond selloff, we may see bond rally. when you take a look at five-year chart of a bloomberg on index, a nice uptrend with a lot of consolidation. the bond could move higher in the year ahead.

here is a passing conversation that matters everyone watching the program. at risk,ight be according to those with knowledge of the matter. at 2060nt reduce funds by as much as 4% for the equities division. this is an effort to improve profits. not really a surprise visit when you look at what we were talking down.the revenue guest: they had three or four years of being a bond colleagues in terms of getting your bonuses. >> much worse revenue performance. >> i think they are the outliers in terms of holding on. as the pool comparatively have been -- comparatively have a smaller price -- smaller piece

issue for people on wall street as they don't have the leverage they used to. banks do that so they had to pay out. now i just a little bit different. they realize there is no other place to go to. >> morgan stanley said to cut its portfolio. >> back to fixed income. fixed income is still with us. how do you make money ago you said you could. >> it is hard. policy i think you have to be much more thoughtful and flexible in terms of where you take your exposures. we think inflation is accelerating. the high cash flowing assess without a lot of long maturity

to parts of the high-yield market. we think acid backs and parts of the agency market. how do you keep creating income and keep generating consistent return and don't try to shoot for the days that rates -- we are not going back to a 13010 year. it worked by and large for 30 years. that dynamic is over. tenure has to feel -- tenure has to follow it to that number. potential growth is slower than it has been historically. the demand for income isn't going away. how do we get that income in a and not is durable

creating one way interest rate exposure. upper want to capture the -- the upside. how do you hedge that out when one of the biggest risks is what happened with duration. you have your upside risk potential here. how do you hedge it? >> it is the most liquid market in the world. are so many ways in the options market to manage interest rate exposure. that i am well-balanced. -- we will use a lot of futures and options. it has been this persistent march of what the fed is going to do. you have so many ways to create that hedge and a

portfolio that is still yielding. in a place like the options market and futures market and just shorting some of the treasury market. you get the extension risk come out. -- elegantt raise ways to manage exposure. >> the start of last year, the middle of last year, you could have made -- now almost the office it of that. have we seen the pain and reality just yet? >> we have seen massive numbers. i think we are going to be in this range where rates are going to move up. a 70% drawdown in the back of the curse. -- of the curve.

i don't think it has been asked profound as others have articulated. some breaking news, we have learned at&t has received a second request in the reviewing of time warner. it is not that unusual to get a second request. it comes against the backdrop of a report yesterday that a confidant for donald trump during the remember campaign he was against it. at&t and time warner will stay on that story. shares are down in the premarket. his bloomberg.

mohamed el-erian, economic advisor. he is also a bloomberg columnist. we talked about the payroll report and what it may mean for the federal reserve. >> this is an employment report that will encourage the fed to hike at least three times next year. going to fed that is move beyond being short-term data dependent and is going to be in little bit more strategic. the blackith us this rock cio of fixed income. is that where we are going to be in a years time? a payrolls report and not a question about the federal reserve? about what is a payroll number. there's a lot of things happening with financial transition.

small business lending, some of these confidence surveys. that are a positive bunch of positive dynamics. from frankly you see this confidence surveys that blow me away. some of the service numbers have been so strong. i think that is durable and it takes away the pressure on the fed to be the one inch of potential growth. moynihan,d to brian and he is seeing it in the private companies. the ceos are coming up a lot more and as he asked him, really exploring deals. you don't necessarily see that reported. >> we have shown this chart on small businesses. you create a bit more of a financial transition, a bit more on the tax side or on the regulation.

businesses are where you have to do it. we think that is really powerful, may be a bit of loosening the regulation banks. it can create a bit of a more velocity into those types of companies. a pretty good tailwind for a couple of months. >> great to have you with us on the program. 26 met -- 26 minutes into the session. here's your market share. growth and an upside surprise coming in hard. .ields our coverage continues on bloomberg. happy friday. ♪

mark: welcome to bloomberg markets.

vonnie: lots to get to from digesting the jobs data to president elect trump and moves in the yuan. more eco-data to break. upable goods, transportation .6%. factory orders were down, down a little bit more than estimated. good,ent data has been but the actual hard data has been very weak in the last number of months. on.her when we concentrate a little bit of a mixed data there. and capitalrs goods, nondefense.