in the united states. consensus is for inquiries and 180,000 jobs at a decrease in the unemployment rate to 4.3%. possible collusion with russia defense. robert mueller has a washington grand jury to collect information. and pimco cao dan iversen delivers. euroseived a 62 billion in the second quarter. "bloomberg daybreak good morning to. -- good morning to "bloomberg daybreak." i am jonathan ferro with david westin. alex real has taken the day off -- alix steel has taken the day off 30 euros goes nowhere at $1 .1871. but the dollar index is heading drop. emir basis point out of the -- a mere basis point. david: coming up on a program,

we will have mohamed el-erian. plus, fresh reaction from the white house with gary cohn. in the meantime, we want to go thatshington for the news broke yesterday. we learned independent counsel robert mueller convened a grand with partial connections between the trump campaign manager the russian government. has worked on the whitewater investigation as well as being an assistant attorney in new york. she is now a law professor. she joins us live television. we also have bloomberg's white house correspondent toluse olorunippa. toluse: we now know the special counsel bob mueller has been investigating the matter come a ties between the russian government and the trump campaign has been panel, is

playing, expanding, looking at trump's businesses, looking at his son-in-law, jared kushner, as well as his former campaign manafort., paul it is a sign the investigation will continue it will be a cloud over the trump administration for several months to come as looks into the potential ties between the trump campaign manager says use of the russian government. david: one of the grand jury's is shrouded in secrecy. you are very limited. why molar need a new grand jury in d.c.?there was already virginia?g in toluse: it is not quite clear whether or not it is just for convenience. the investigation is happening -- much of it is happening in washington, so maybe it was more convenient to have a grand jury here in washington, these it could be that they found something so explosive that he felt he needed to have a grand jury moving already as soon as possible.

we found out about the meeting and thedonald trump jr. russian lawyer in the last couple weeks, and that may have been the catalyst behind all of this. to bringe needed together a grand jury to start subpoenas from according forward subpoenas on documents, as well as interviewing witnesses. david: you are experienced in this area, julian, both as an independent counsel and a u.s. attorney. how significant were unexpected is this development? julian: i could not be less surprise, actually. this is a white color investigation, they are always going to grand jury. i will be surprised if he did not go into a grand jury. damon: everything time, not unexpected. this gives him subpoena power. at the same time, what does it mean for the people in charge of the investigation, because it is not an easy thing being called

before a grand jury. julie: no it is not. each one should have a longer to advise them before they go in front of the grand jury. they should be prepared. the worst thing someone can do is go in there and line, obviously, you are subject to perjury prosecution. closure at all, every lawyer will tell you to take the fifth, but most business politicians do not so they can because of reputation or business consequences, so they go in there and talk, but one has to be incredibly careful. importanthink an click division -- can they think the lawyer in with them when they are being questioned? julie: no, they may not, and that is why it is very tough to go in there. david: thank you so much, julie o'sullivan, former federal prosecutor, and now georgetown

college professor. toluse olorunippa. jonathan: treasury yields slumped and ian strengthened. joining us is shawn golhar and harm bandholz. shawn, how do we understand that? the headline drops, and then the market moves. corporatehink strong earnings, and i think from the pc side of things, investors right now are taking themselves out on the table. they are really focusing on getting a budget done, a debt limit done. on saxophone, the administration has been putting out positive statements, -- on tax reform, the administration has been putting out a positive statement are they want to help get america moving again. jonathan: sha specifically, it

does have an impact on the marketwn, because of that. it is a distraction? shawn: absolutely. this is a really big deal, obviously, and if you want to get tax reform done, you need a lot of time to do it. we are already coming into august. when they come back into september, they need to get a budget on, that reform. we believe that by the first quarter of next year, the deadline on tax reform, i know the house i said maybe november , but under the guise of the investigation from the fbi, the grand jury, all of this. jonathan: when the news broke, i imagine your phone started ringing. the answer is really it is not normal, but it was expected, as the last speaker mentioned. i was not surprised at the grand jury.

the question is -- are going to be any leaks from this? what will we hear? how does the president response to all of this? david: going back to tax reform, when you say destruction, you do not want to underestimate bandwidth. you have the president was the to potentially being called the grand jury come other members close to the president. and really concerns a lot of time. shawn: absolutely. and of public hearings, you need congress together to talk about it, to talk about the legislation. harm, you had a forecast for u.s. tv, had a included some physical -- u.s. gdp, and it had included some fiscal tax cuts. year, we thought the republican leadership gets something done. we saw through the majority,

, andrent groups, the party so many are seeing the opposition, now having the chance to carve something out, they would somehow get their act together and agree on something. but after all that we have se en, we took that off the table. jonathan: after all the excitement, what we did see in the data was a lot of optimism from businesses, a lot of optimism and confidence from yours as well. what we did not -- from consumers as well. what we did not see that translate into was hard data. it does not really mean anything to the hard data writer. harm: i think the hard data has not been as good over economic activity. as it used to be several decades ago. to discount atend little bit. it makes us human. but two years ago, people were crying recession, and we said

that is not true, is not going to happen. the same time, when we had the consumer index hitting multiyear highs, most recently, traditionally, the leverage woodhead indicated. basic questiony is, is this real, or is a distraction? isn't that the first time we have seen the markets react quickly, particularly with mr. mueller, and then they rebound? should we continue to pay attention to washington, or should we sort of discount it? shawn: a attention to washington and what is going on, but keep in mind how the fall has a lot, a budget on a debt limit, which has serious implications. the white house and the administration but other nafta renegotiating principles. there is a lot of concern that they are taking a really critical review of how they take

bilateral trade deficits, something we have not seen before. if you're having trouble, maybe the white house --david: it is only 12 days away. it is coming up right quick. jonathan: the other big question it's the markets. what is the prospect of a government shutdown? can gety, you republican control in the house, the senate, the white house, and we have a government shutdown by the end of the year? a very high't put right now, but i will be honest, there has been a lot of chatter, and a lot of people are really worried about it. i think the border wall with mexico may be a determining factor. it is extremely important to get the wall, you heard this in the leakedtranscripts -- transcripts, and you see some democrats say absolutely not, and some moderate republicans are worried about this. so it may be shut down just only funding of the border wall. treasury yields

market, the three, the six-month, what may or may not happen in the coming months, but the water market, and for investors, when they of oj government shutdown, how are they thinking about that? is that just you know what, forget it, is that the approach? shawn: i do not hear the right now from investors. i am really worried about the debt limit. this is kind of an unusual situation. you have people in the white house who are saying do not increase the debt limit. maybe we should renegotiate debts. i think there is some concern. i discount some of that personally. i think it was campaign rhetoric. they are trying to get a clean debt limit increase. jonathan: shawn golhar of barclays, harm bandholz of unicredit will stay with us. coming up, alan krueger of princeton, bill gross, and others will be joining our

program. from new york city for our viewers worldwide, you are watching bloomberg tv . ♪

jonathan: it is just a here in the united states. july's nonfarm payroll come out at 8:30 a.m. eastern time. 180 -- the british is 180,000 jobs. the unemployment -- the prediction is 180,000 jobs. the unemployment rate reduction is 4.3%. joining us is carl riccadonna and still what this is harm bandholz, unicredit's chief u.s. economist. carl, what do we expect? carl: no real disruption here.

we know the economy is on decent footing at the midyear point, gdp growth roughly 216% last quarter, underlying growth at 2%, so the fund is not so much -- focus is not smiley face of jobs creation, but as always, we will be watching for wage pressures. i do not think we will get it just yet. we had acceleration last friday in the haze of the gdp report, we also let me employment cost index, and it wage compensation might actually have decelerated in the second order. we will eventually get a tight labor market wage pressure building, but we're not quite there yet. jonathan: harm, they tell me it is coming. how long can they say that until they start rethinking that answer? [laughter] jonathan: it depends on where we go, isn't it? cost measures

of all accelerated. it is just as strong as we would have thought. we were talking about 2% plus, expecting 2.5%. but there has been an acceleration. it is slower than we thought it would be, but it is going up a little bit. one aspect that helps to explain why wage growth is so slow, if you look at labor costs, it is growing at a pretty decent pace. point where the administration has to focus on. babineaux as managing budgets and i would only say is this real or is this timing? -- back when i was managing budgets, i would always say -- is this real, or is this timing? so is this real, or is the

timing? turnover actually depresses wages. other fundamental factors? carl: there are find a little factors. if you look at unionization rate -- they have been in a long-term decline. globalization has become an increasing issue for workers. automation has also become an increasing issue. if you go in and demand a pay raise for your boss, they will say, "would you rather be replaced by a robot or a foreign worker?" that means it is not just unique to this current cycle by the last flight cycles, you can see the phillips curve is getting flatter and flatter. david: is that the basic underlying issue, in which workers have lost pricing power over employers? they have lost it, and it is not coming back? harm: i still think the phillips curve is alive. think there is some nonlinearity in theire.

that is why i think officials are pushing the novelization rate. entering east timor policy curve is increasing. i think the risk of being more cautious on a monitoring site or finally normalizing at the pace they should, i think it is pushing toward normal. jonathan: you made quite a big call at how low you think unemployment can go. how low do you think it can go? harm: looking at the mathematics, we can go to 3% by the innovative 2019. i think we have 4% by the ending of this year, 3.5% by the end of next year, and 3% by the end of 2019. 100,000 six months, last month 80,000. it does not matter.

wage faster than we need to accommodate -- jonathan: how abnormal is it? harm: very abnormal. we had it in the late 1950's, so it is possible, but the jobs are there. if you look at the jobs numbers, job openings are 6.5 million. that is about the same number as the officially unemployed. there is a job for every unemployed. david: given the numbers that harm just went over, you would expect been great to me zooming to be zoomingrate up. is inching up. carl: you cannot expect the folks to go half of the until their coast in but more enticing employment

prospects. i agree we have a handle on the unemployment rate and can potentially go to 3% in 2019. the monkey wrench if we suddenly see a big labor force in orange off of the sidelines as the labor force participation rate increases as wage pressures come about, so we continue to have job gains, but we might not get 3% if they come out of the woodwork. jonathan: 18 months ago, increasing 200,000 jobs a month, you would say to me -- carl: that is in line with my forecast. [laughter] jonathan: i love it. carl: can we maintain this pace of job gains?i said absolutely. we are not of the point -- it will be the elasticity of demand, and when wage pressures pick up, then employers will demand fewer workers. we're not there yet. jonathan: next month when it is hisolls friday, i will cut interview, and we are just going to play it.

carl: there you go. [laughter] david: you can see why we love carl riccadonna. harm bandholz from unicredit will be staying with us. coming up, mohamed el-erian will be joining us. after the payrolls report, bill gross reacts to the data. that is at 8:30 a.m. eastern time. live from new york, this is bloomberg. ♪

emma: this is "bloomberg ."ybreak i have ever thought. it was a toyota have jointly decided to build a plant in the u.s. -- i am emma chandra. toyota and mazda have decided to jointly build a plant in the u.s. better-than-expected profits in the latest quarter. revenues of rbs'markets which

houses the mortgage business group. a little-known money manager, nowi reason -- dan iversen, is starting to fail. said pimco receives $62 billion in the second quarter. that is your bloomberg business flash. jonathan: performance matters. that is the takeaway. 99% over the last five years. i'm looking at pimco income fund , returning 718% annually. that is how you -- 7.8% annually. and the huge outflows and out the returns. anzathan: that makes alliz pretty happy to be caught up with the cfo earlier. dieter: i would not make it

forecast how pimco is developing. only top performers get inflows, and that five has to be done and wond -- fight has to be done and won and be beat. jonathan: it does not matter anymore, and a load of passive money, but what we're finding and ihen bill gross left, spoke to people close to him, they said look at dan iversen. it is going to be ok. that has transpired. but one man matters quite a lot. david: there is some irony perhaps. moving away from a superstar, bill gross, really a trade name. you put someone unheard-of and he will be fine, and now the is a superstar. jonathan: that is one hell of a call led by this guy

right there. david: that is almost always true -- when you have a superstar, there is a team. the superstar gets the credit, but it is the team. what an: coming up next, company story this year and what a surge in the stock price. ceoill be speaking to the in her first interview program, mindy grossman. you are watching bloomberg. ♪ who knew that phones would start doing everything?

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just grinding out the eighth straight day of gains and yesterday's session. treasuries yields are up one basis point in the story and the muteds market is reaction. weakness in the dollar for the fourth straight week, will it continue? let's get you updates on headlines outside the business world. robertpecial counsel mueller is using a grand jury in the russian investigation. he is looking into russia's meddling in the presidential election and possible collusion by the trump campaign associates. attorney general jeff sessions will unveil have a government plans to crack down on intelligence leaks. he will announce what law

enforcement will do to prevent the unauthorized disclosure of information and find those responsible. he has said some people need to go to jail. world'sn one of the tallest residential buildings in dubai has been put out. it engulfed as many as 50 stories. it's a second major fire from this skyscraper. this is bloomberg. david: weight watchers announce its second-quarter earnings yesterday and it be productions on both revenue and earnings per share. trading took the stock up by as much as 23% and this is on the heels of a dramatic turnaround overall for weight watchers begun when oprah winfrey made a substantial investment in the company. that red part is when she made her investment.

under its newnued ceo, mindy grossman. she had a successful time as ceo us from ourhe joins first tv interview since taking over weight watchers. tells about these earnings, how did you do it? >> the team has done an incredible job over the last andle of years to reignite stabilize the business. if you look at the current quarter, 12% revenue growth, 17% growth and 20% in subscribers, up to 3.5 million. we have growth in every geography. it has been investments in technology, investments in the member experience. it's been a focus on products and certainly the partnership --h opera to drive thought with oprah winfrey to drive thought leadership and take its brand of 54 years helping people

now transcends helping people hollister clay in life. put simply, is it adding new subscribers or is it keeping the existing subscribers longer? is it engagement or size of the audience? >> the answer is both. it's important that we expand our customer base, and remember base. we certainly have a history of being able to help people and the need today is greater than ever. it's not just helping in weight. it's giving them a complete experience to engage them and support them, to motivate them. the other thing that is incredible about the brand is the science behind it. it works. this is something that should become part of your life if you want to live better. having said that, to your point, engagement is critical. the work that has been done on thehsn app and the physical

environment is around the idea of how we can keep people longer and motivate them? we want to expand our base and we want to engage people longer. jonathan: when you think about lifestyle businesses, i think soul people going over to cycle. can i go to weight watchers as well? >> everyone uses the word lifestyle but what it really means is how you can be a brand that kenexa gives people meaning. with technology today -- how can you be a brand that connects and gives people meaning. how can you create the engagement of the physical and the digital experience? we will be doing a lot of work around expanded audience, engagement, and the idea is to create a mission around the brand that people want to be part of. jonathan: will you be

approaching the younger demographic in a multiple way? we have gender demographics, diversity, and certainly, we will target age but what's also more important is not just age, it's life stage. young moms, people starting work for the first time, people wanting to feel healthy to live better lives. than just one subset. i think we have a broad opportunity around the world. this is a global business and we can even be greater as a global brand because think of our business is not just a financial return on equity. it is an emotional return on equity that's changing people's lives and that was very powerful and that's why i wanted to join the brand. david: you know brands like few others do. explain to us how you are looking at this brand now. rand andll-established

oprah winfrey is a well-established brand. at the same time, does weight watchers get in the way of where you want to take his brand? it's all about weight and what you are describing as well beyond. >> correct, and that's the opportunity. how do we become more holistic. weight will always be at the core of what we do. david: you don't need to change the name? >> this is a name that is so powerful and has been around a long time. does it you've all to a powerful mark? that's work we will be doing around the transformation of the brand. it clearly is important but the way i think about it and it goes back to the power of technology today -- how do we use the history, the data come and what we have to personalize the experience? in the future, everyone should feel it's my ww. that is very exciting. an idea ofive us what weight watchers will look

like in the next one year or five years? >> i'm clearly working with an incredible team and we are formulating what we feel the opportunity is. it goes back to a highly personalized experience, the integration of the digital and physical, the power of community. it's whether it's the community on ourapp or our social community including 4 million facebook or the physical community. community has been a very powerful assets to the business. what i think about today is what truly differentiates the brand. -- meaning,eting community, personalization and being able to have that emotional as well as the physical relationship. this is a brand that has that. jonathan: i remember when oprah winfrey got involved. the stock dipped down and then went straight up and many people

were trying to work out what her role would be within the company. ame people thought it was name to attach the company and the stock would roll off the back of that. how has she integrated into the company. what does she do for weight watchers? >> from the first time i sat down with oprah winfrey when i was thinking about joining the operay, it's very clear, -- oprah winfrey is not a business person, she is an inspirer and a visionary. being able to partner, to think about where the company will go and have her as a board member as well as someone who believes in the program because it works is sustainable and very valuable. having said that, we have a very motivated team. basehink of the employee at the company, they are not just there for a job. they feel they have a mission to impact people's lives.

as an employer, that's very powerful. partner andinue to utilize opera. -- and utilize oprah avid: you have been successful ceo and you're also a woman and a prominent woman stepped down from avon and it triggered stories about female ceos. of whether the issue you are male or female or is there a real issue in united states companies. >> just look at the numbers to know there is an issue but if you sit back, the issue is around diversity. if you look at successful companies, they tend to be ones that are diverse not just about gender but holistically. tohave to create a movement be able to create environments that will foster support and allow women to move up and that

will require men committing to that and working closely to embrace the idea that diversity drives innovation and long-term business success. jonathan: great to have you on the program. pressure from pershing square capital. it seeks to change the ceo and five board members. the stock is up 2.89%. boardts five seats on the . adp rejects the request to extend the nomination deadline. these are problems you don't have to deal with, mindy grossman. willg up, mohamed el-erian be joining this program with a look ahead to payroll about 15 minutes away. you are watching bloomberg tv. ♪

emma: this is bloomberg daybreak. coming up, bill gross, fund manager reacts to the u.s. jobs report. jonathan: with eco-data falling short of estimates and markets lowering expectations for a rate hike, the employment report will be especially important. mohamed el-erian is with us. we were not expecting you so thank you very much for giving us your time. walk me through what you're expecting in about 50 minutes time. let me tell you what i'm

hoping for. i'm hoping for solid employment growth. second, wage growth echoes to 3% the rate, a tick up in which is at a decade low rate. if we don't get that, it's headaches not just for the fed but also for main street and wall street. we need to see this trifecta and when he to see it starting to happen now. the data looking at and wage growth specifically, what kind of wage numbers do we need over the next couple of months to put a rate hike back on the table at the fed? 3% will be the key because that will tell the fed that the phillips curve is alive, that wage growth and inflation respond to job creation and it will tell the fed that while there are structural changes going on, there is still a cyclical component to policy. we need to see about 3%. david: we understand what you

hope for and what the fed hopes for. do you see anything in the data that would suggest we would get it? >> history tells me not to give up as yet. has beenight, the data disappointing. we are going through a soft patch and it seems to be a prolonged soft patch despite encouraging soft data. moreetting more and worried but hopefully, history will assert itself. david: if we are disappointed, who can do what about a question mark can the fed do anything about it? can the white house to anything about it? what do we need to do? >> the fed can do very little about it. it has done a lot and i would argue the fed has done too much damage and what it can do to financial stability down the road. what we need are three things and only congress and the

administration can deliver this. balanced aggregate demand between fiscal policy and infrastructure spending in particular. reform need programs tax and other elements to increase potential growth and third, we need to start worrying about pockets of excessive indebtedness, particularly student loans. we need actions on all three and that's not something the fed can do. if something congress and the administration can and should be doing. i remember when janet yellen came in and took over from ben bernanke he and a first big landmark speech on the labor market finished with we've got more work to do. that was several years ago. would her speech say our work is done? if she was able to be candid, she would say that not only our work here is done but we desperately need a handoff because there is more work to be done by others. if she were candid, she would

stress not only the need for a fromy handoff bu excessive reliance on the fed but she would also say be careful of the risk of relying on us for too long. be careful about future financial stability, be careful about undermining the political economy of the federal reserve. jonathan: is that risk already here? they're waiting for a handoff and it's not coming. that means the financial stability risk keeps bubbling up. is the risk already here at the fed's door? >> i think it is. we have decoupled financial asset markets too much from fundamentals. the good news is that there is still time to do something about it. we still can improve fundamentals to validate existing asset prices. but we've got to be careful because at some point, the gap will be so high that it will

only be filled by financial asset prices coming down. david: is it possible we are counting on too much from congress and the white house? it's whether they have the power. if some forces are things like globalization and things like increased technological use, the digital use, if those are changing the economy, are those passed the ability of congress and the white house to fundamentally change? >> that's a great question. undoubtedly, there is a structural element that we don't fully understand as economists and that's why we have a productivity puzzle and wage puzzle and inflation puzzle. we simply don't fully understand what's going on in terms of how things are changing or how we work. it's important to continue working on it while simultaneously doing what we can do on the cyclical side. we still have sufficient aggregate demand.

we still have anti-growth elements in our tax system. there is a lot you can do on the cyclical side as well as starting to understand better the structural side. david: mohamed el-erian will be staying with us. you want to check out tv by watching us online and even watch some of that interview. click on our charts and graphics. your terminal.n live from new york, this is bloomberg. ♪

david: this is bloomberg. stocks went down and bonds went up as soon as word broke yesterday that the independent usesel robert mueller, will a grand jury to pursue his connections between the trump campaign manager russians. the stock market recouped a big part of its losses. still with us is mohamed

el-erian. give us a little bit of help today. thehe market overacting to investigation or is there an issue that could affect long-term, the economy? issue but there is an you said critically long-term and that's how the market things about it. is quicklyevery fall recovered. that's why people have been conditioned to buy on the tip and it's been a profitable trade. liquidity explains all that. the markets are benefiting from enormous liquidity. it comes from central banks, particularly the ecb and bank of japan. it comes from the corporate sector who have massive cash accumulation and share buybacks and higher dividends and it comes from households. means a bigality proportion of incremental income goes to people who invest in the market. as long as the markets are

comfortable about liquidity, they will fade every single pullback based on politics. david: how big a danger is that? you are suggesting that the market should be reacting more to these things but we are insulated because of this massive liquidity. that means some decisions are not being made that probably should be made. >> correct, i think of it as the distinction between a journey and a destination. liquidity is about a journey and it makes the investor enjoy the journey. it's very comforted because not only does an investor get higher returns but he or she suffers lower volatility. butas a wonderful journey at some point, you've got to bet on the destination. what the markets have been conditioned to do is to say i know the destination is somewhere out there, it's long-term. for now, i will bet on the journey. that can continue as long as to put innks continue

a lot of liquidity and that's what being in europe is fascinating. optimism, nos euro longer euro gloom. that will put the ecb in a more difficult position. jonathan: at the beginning of the year, you were out front with several other people that said the fed will lead the market and there will be a regime change and there was. this time around with the financial stability issue and liquidity and the idea there forever,entral bank will the fed have to move away from the markets to provoke point or not take that risk? many investors believe they will not take that risk. >> i suspect most people are underestimating how worried central banks are by financial stability. broadcasting. if you look at the speeches, the concept of come in more often recently and for good reason.

they are worried that in the be a headwind to growth. i think markets are underestimating that there is a third objective for the fed, there is a second objective for the ecb and that is long-term financial stability. that means that if there is a very balanced judgment call, the fed will be tighter than otherwise but it will not move ahead of the data. recent's problem is that data has signaled the prolonged soft batch and that is of concern and rightly so. jonathan: many big investors have said now is the time to be cautious. some may say now is the time to de-risk. what are you saying now? this is aing that time where you've got to figure out if you end up making a mistake, what mistake can you afford to make? can you afford to give up on the extra five percent-8% or can you afford to live

through a major correction? i think investors have you think this way. in the meantime, focus on sectors that have lagged. leadership in the u.s. market but around the world has been handed off from one sector to another, from one jurisdiction to another. game being played, lower the dollars at risk but take advantage of the rotating leadership. your payroll gas? --guess? >> i don't guess so much but i think 180,000 is amazing. 17 million jobs a been created, people still expect this incredible job creation. ♪

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your voice is awesome. the x1 voice remote. xfinity. the future of awesome. jonathan: it's payroll friday in the united states.

is for an increase of 180,000 jobs and a decrease in the unemployment rate. robert mueller is said to be using a washington grand jury to collect information on the russian investigation. pimco receives a record 52 billion euros of inflows in the second quarter. from new york city, good morning , counting you down to the pay role report. are up one basis point. the euro-dollar is stable. we still go toward a fourth straight week of declines for the u.s. dollar. futures are just positive. david: to give you a sense of what's coming up later this hour, will gross on the u.s. jobs report plus, fresh reaction from the white house with gary cohen but we have to set it up. away from30 minutes

the payroll support with 180,000 jobs predicted and the unemployment rate 4.3% joining us around the table is our chief u.s. intelligence correspondent and or economics professor and the chief market strategist weiden and co. what are you looking for? >> what i've been looking for the past five years. you can just replay the conversation >>. does a good problems to have. if we have the opposite is because the economy is turning down. all indications are that we will get another solid jobs report. we are waiting to see jobs recover. it public -- it's puzzling it has not been stronger. those of the main things to look at. jonathan: if i told you 18

months ago that we would still creating 200,000 jobs every month, would you be surprised i would be a >> little bit surprised. i would think we would see faster which growth. jobink we have to see growth moderate given the population and immigration policy. also given the aging of the workforce. i think we should get accustomed normal as jobs being opposed to 200,000 jobs. serio mo have an el-erian for solid job growth. north of 3% growth in wage growth as well as increasing, what is the chance you get north of 3% on wage growth? >> when? by year end, i think it's possible. david: if you took these numbers, you would continue that rate. this towardtend

year-end nzx celebration, you could easily get to stronger wage numbers. seeree that we will not that in these numbers. that being said, if we look at the bigger picture but hold a lot of things constantly productivity games in wage pressures, if the economy is accelerating in the back half of the year, we should naturally see effective job growth to coincide with that. in the first half, we averaged below 2% and most economists were looking for about 2.5% gdp game. if growth accelerates, jobs will etc. it as well -- will accelerate as well. david: what does this tell the fed? 3% will be key because that will tell the fed that the phillips curve is alive, that wage growth and inflation

responds to job creation and it will tell the fed that while there are structural changes going on, there is still a cyclical component to policy. is the phillips curve dead or just in a coma? >> i think it's sleeping. we have had deviations from the phillips curve before that historically, it has been regular forecasting and that content -- will continue to be the case. keynesian economics is just not changing and the fed is not changing. but the fact that change. i don't think you want to react too quickly to changes in the facts. jonathan: how big does it need to be and how far back does it need to go? >> if you look at the fed policy in general, they are pretty close to the sweet spot. the inflation rate is not that far below their 2% target and we

have unemployment below 4.5% and it looks like the recovery is not having any imminent threats. in the big picture, i was say they have magic it -- navigated these uncertain waters pretty well. not be so quick to jettison the tools that have helped them guide through this time. jonathan: they missed the goal post a lot. there is the idea that once upon a time, they said one of the magic numbers was 6.5% and we are now south of 4.5%. you can't have it both ways. it's not completely broken, just flatter. david: how is the market reacting to all of this? take volatility, it's not dead but it's pretty dormant. >> when you talk about the vix

you have to talk about the bond market. it will be interesting to see how treasuries react. i think the bond market is starting to realize than nominal gdp this year will probably not be too much higher than 4.5% or so. treasuries can be supported against that. the bond market to a degree is realizing that the fed is sort through these new laws of physics, if you will. as they do that, they will take the bet that the fed will err on the side of wait. new laws and inflation are coming into play that we did not understand before and therefore they will be buying treasuries rather than selling them. sayd: is it too simple to that the bond market is betting against growth in the future? >> if you look at the 10 year yield, is probably where it should be now.

it's a steady grind forward. to keep an eyee on what's happening on european growth. ecb is the market knee's are and that feeds into this as well. we will catch up with gary cohn a little later and many think he is the front runner to become the next fed chair. when you think about the federal reserve, would you like it to be less the university of the federal and would you like to see someone like gary cohn leading it? maybe it's not so much about phd's, maybe it's about people who have had -- who have sat on trading desk. i think the waters need to be oxygenated. at nine ande a vix

10 for weeks on end, i don't think that is healthy. one thing that mario draghi and janet yellen do well with is oxygenating the waters with a little bit of volatility breaking through once in a while. i think it's a sensible strategy the markets feel a little bit like there's something going on besides central banking. is there something where the fed might go towards where they are not the market best friend anymore? >> i think we are shifting in that direction this year. the fed is accelerating the pace of tightening ship and the balance sheet unwind will probably ramp-up in the fourth quarter and over the course of next year. the idea that the fed is going to support the markets, i think tot idea is beginning diminish at least to some degree.

in terms of who should be at the fed, i think a labor economist is a great person to be at the fed. coming out of the great recession we had an unemployment rate at 10%. that was one of the most pressing priorities to grind that lower. if we zoom back further, one of the most pressing issues for the u.s. economy for the last several cycles has been wage stagnation. it's the concept of janet yellen and company running the economy a little bit hot to try to coax marginal workers into the labor force i think is a very worthwhile experiment and one that should continue until we start to see more evidence of growth. jonathan: now you are a labor economist. what i think is most important for the fed is to display sound economic judgment. you can do no better there than janet yellen. look at her forecast and how we of thes on top financial crisis and how deep it

would be. also her response to the crisis. i would advise the president and gary cohn to persuade janet yellen to stay on. whothan: do people forget janet yellen was before she was the fed president? there was a lot of foresight with her. >> i think people who read the transcripts see that. i think it's clear from the fed transcripts that she goes about doing her job. after alan greenspan, that was ben bernanke is idea to lower attention to the fed. difficult because the economy evolves over time. if you go back to the track record and the best predictor is how people did in the past, you can do no better than janet yellen. as we get ready for the jobs numbers, you bring another factor into this which is the employment diffusion index.

explain to us why you think this is important. >> i'm trying to make payroll friday a little less monday. mundane. in -- the unemployment rate is probably moving lower. the employment diffusion index of jobs the breadth creation in the economy and this is an important cyclical indicator. this is across the eight year mark of the cycle and that's leading a lot of folks to say the next recession cannot be too far off. cycles against measuring using the calendar and instead opening the horse's and looking at economic fundamentals whether it's low inflation, a lack of wage pressure, low interest rates. even the composition of growth tells us we are still in the early to middle stages of the cycle. the other way of looking at that is the breadth of job creation in the economy.

of its highs, absolutely, but it's trending higher over the course of this year. that tells us the breadth of gains is not petering out and that is more reinforcing evidence that the next recession is a long ways off. david: you would be worried if you saw a plummet there? you saw one back in 2001 and then 2008. >> yes, this was in decline because of the construction factor which was rolling over so job gains were a narrow part of the economy and that was evidence that the life was trickling out of the cycle. david: thank you for that chart. up, bill gross reacts to the u.s. jobs report. live from new york, this is bloomberg. ♪

david: markets moved yesterday on news of the grand jury in washington working with robert mueller on his investigation of the trump campaign. should the markets have moved and will the moves persist? he resign alan krueger of princeton and michael purves of weeden. the stock market took it dive and then came back. it's not the first time that has happened. when we hearecur news of investigations. should the market be reacting the way it is? is it a longer-term significance? deflection of any political resonance in the s&p to a reportelates

card on donald trump, you see it in the dollar and you don't see it in the dow or the s&p 500. that sotly a reflection much of the good things that have happened in earnings this year have come overseas. it's not a function of the trump agenda. one of the confusing things is we had donald trump elected and the switch from monetary to fiscal stimulus coincided with globally synchronized growth which is the first time it's happened since the crisis. it took some time for the markets to understand that but that everyreal sense time the delegates week, that's a tailwind for corporate earnings come a tell when for the u.s. sectors and alleviates stress in certain markets. david: you spent a fair amount of time in washington and we had mohamed el-erian on and he said

you are seeing massive liquidity really masking some of the reaction to the markets. they remember there is a lot of liquidity so they don't have to worry. is that masking some of the normal market reactions? >> i have no idea what the markets are doing. i may have some sense of washington but i will quote isaac newton, i cannot understand what the stock markets have been doing. you don't understand why it's as high and it keeps going? yes, given what's going on in the u.s., we have not had no change in policy and the prospect for change in favorable economic policy are pretty dim. i think improvement in the economy in europe has helped. it seems to me the markets may be overreacting to that. i think there has certainly been a feeling over the past five years or so that the fed is a safety net and whatever shocks we get, we have been recovering

from an it has made a good environment for investors. i don't know how long that can continue. >> i think it's a global central bank. yield on, the dividend the s&p 500 is right on top of the 10 year treasury yield. my-2-2 framework. the more the numbers coagulate, the more pe's will expand against that backdrop. jonathan: when you put that , the story ise bond yields are low. is whydon't understand people say we are getting a shakeout in the bond market and that's ok. >> for whatever reason, if the 10 year yield goes to 3.25%, equities will not be ok.

the cost of equity capital will have gone up so that will be discounted at a higher rate. every cfo of every fortune company will be having a different set of metrics by which they are evaluating expansion. jonathan: alan greenspan said this so may times that the bubble will stop when it hits bonds. if it's in bonds, it's in stocks, too, right? >> you go back to the mid-60's in the mid-90's, pe's expanded against the backdrop of low inflation. the key swing variable is inflation. it starts to crank up and that will start getting the global rates to a different level and that will take the vix of higher 500 --bably put the s&p you will not see the pe expansion. you'll start seeing consolidation and quite possibly

end up at the 2350 price tag. david: what is the prospect that inflation takes up and we have this knock on effect? is there any indication we should pause on inflation? >> not much, i think it will have to come from wage growth. wages are still 55% of the u.s. economy. if we see inflation and services, it will come from a higher wage growth and we have not seen that so far. i would like to see ages edge out the 3.5% growth. it's hard to see where the pricing pressure comes from in the current economy. our guest will both stick with us as we count down to the payroll report. gross will react immediately to the jobs report and later, fresh reaction from the white house, gary cohn will

be joining us. the consensus is 108,000 payrolls added in july. that's the estimate. the estimate for unemployment is a decrease. earnings, 2.4% year over year. the numbers drop in five minutes time right here on bloomberg. ♪

emma: this is bloomberg daybreak. alien are activist investor bill ackman has a new target, adp. it provides payroll and benefits solutions. the company says pershing square wants control. bloomberg reported last week that he had faith in adp. and nissan will create a

large plant in the u.s. toyota and mazda are buying stakes in each other. we are just a few minutes away from the july jobs report and its likely to sound familiar. labor market has been characterized this year by solid job gains and full on them -- and low unemployment. they probably added 180,000 jobs in july making the jobless rate slightly below 4.2%. jonathan: thank you very much. is alan krueger and michael purves. let's talk about the u.s. dollar. it's headed for a fourth straight week of decline. is the story and six minutes time going to change that? a twocould, it has been pronged story, the fed which is a function of inflation and the economic data in the u.s.

to the extent that the jump data comes out stronger, maybe 2.25% and more focus on average hourly maybe 2.6% year-over-year, that could shake up the market a little bit. the dollar is catching a bid with u.s. rates catching a break and given the liquidity, it could tailspin into bigger moves with things like dollar-yen or the stretch in the euro. jonathan: in the currency market, things are always relative. weighting has been toward the euro. even if you get a jew -- a decent jobs report, is the trend still euro-dollar higher? i think it has been overextended on a short-term basis. i believe the reallocation story in europe is a real story in the

medium-term and longer-term trend which will be positive. i think it has moved a long way pretty quickly and when things get this stressed, they tended to correct and they can correct pretty violently. it's similar to the u.s. dollar story. we went from the french political risk and broadly in europe to very comfortable politics and now looking more at growth and recovery there and the ecb shifting toward the more hawkish stance. it's very constructive eurozone and i think the euro-swiss move we saw this week and last week tells you a story as well which is that the reallocation into europe is alive and kicking and probably only just starting. david: talk about the technicals for a moment. some are looking at the dollar and if you look at the 200 day moving average, there is indications the dollar wants to get a bid. it may be bottoming out. what do you make of that? >> i agree on that.

i look at the bloomberg dollar aroundnd it's sitting support at 1150. that is holding on pretty well and showing signs of basing. dollar --o get to a one dollar eight cents to get to dollar-yen. we have in making new lows but if trying to hold in there. there are signs that the dollar story is starting to recover a little bit. we were at extreme negativity in terms of the political sentiment and the perception of the fed and dovishness there. any shift in either direction on any of those fronts and the dollar could recover quickly. jonathan: michael purves? i would agree with everything on technicals but one thing that's interesting is if you look at the positioning on the long euro positioning in the euro market, is very aggressive.

through extreme positioning on the euro, you don't really get a good contrarian signal like you do another futures markets. in other words, this crowded trade could stay crowded for a while with perhaps a move slightly higher. jonathan: you mentioned the structural allocation into europe. you say there may be rate differentials but maybe it's a computer this a complete reallocation it to europe with money flowing back in it will cause the euro to strengthen regardless of what happens with rate differentials. agree, i think that story is in place and is only just beginning. if you look at the fund flow data in japan, there have been big outflows. a lot of that is going to europe will stop europe, swiss tells you the reallocation from safe assets is alive and kicking.

the one thing i would highlight is that the ecb does not like egg moves in the dust is not like big moves in the fx rate. the officials does that in the last ecb meeting. jonathan: what is your payroll gas? guess? >> i think we will come in softer. >> we will be a little bit below consensus. michael purves? >> i would be in the 160-180 range. >> july is a very difficult month. jonathan: great to have you with us. we will get you up to speed on the markets. the jobs report is coming up with futures firmer. we are on a eight day winning streak on the dow.

the story in the bond market, up and eurore dollar is stable and in july,00 jobs, , unemploymenttes down to 4.3% as estimated or in the lowest since 2001 and it was down for a good reason. as more came into the labor force, participation kicking up. wages, little movement there, average her -- average hourly earnings up. the headline encouraging here, given that we keep hearing from businesses they are finding difficulty hiring workers amid the labor market. the small business survey earlier this week, the highest

and 17 years but an enduring puzzle on wages. still disappointing this expansion. industry breakdown, manufacturing book out of a -- broke out of a slow patch. construction still weak, retail just 900 and a rough year for the industry. leisure and hospitality, education and health, are the winners. some of the same patterns we have been seeing all year. jonathan: thank you very much. an upside surprise on the headline number. wages firmer than expected as well. at 2.5%. participation rate higher as well. can the dollar catch a bit? we are up a quarter of 1% on the dollar index. alan, what is your take away? >> a very fine report. a solid report all around. labor for sticking up, wage number beating expectations. the recovery is continuing.

jonathan: participation rate slowly grinding higher. taking caria. -- it can carry up. >> sideways. the reason is that retirements are still pulling it down, that is pulling it down three -- 3/10 percent. the economy is bringing people back. one of the things i am focused on, again a good solid report particularly this late in the cycle. if you look at the hourly gains -- that 12 month average, in march, has been heading south. thathas not really been trajectory and the fed will be responsible to longer-term trends here. month-to-month there is volatility. jonathan: michael purves and alan kroger will be sticking with us. let's get you up to speed on the jobs report.

209, estimate from unemployment was 3.4% and that is exactly what we got. wage growth comes in at 2.5%. we can send it over to tom keene and david gura who stand by. >> on bloomberg radio, bloomberg television while we wait for the gary cohn interview. cohen,e spin from mr. david westin, jonathan ferro, right now joining us is william .ross as we look at a better than good jobs report. enthusiasm in wage growth. is it a wage growth that is enough to change the dialogue into the september meeting? maybe not. 2.5% and didn't change. obviously that is positive but not much.

more than expected during this point and time in the cycle. rather strong economic report but i don't think it moves markets much. job growth to me, does not seem to stimulate economic growth and consumer spending as it has in prior cycles. anemic and the mysteries are rounding the participation rate wreaks havoc. what i think is most important to policy rates in the u.s. and globally our core inflation rates which are declined from 1.5% in the u.s. 1.83% over the last few months. until we see a lift back to 2% in terms of the core inflation rate, the fed probably begins quantitative tightening but will not raise short-term rates this year. >> we saw that with governor carney in a different calculus. david gura wants to jump in with

westerns on labor. if janice henderson held a jobs fair today, 200,000 people would show up. how can you have a good labor economy and have 20,000 plus people show up to put stuff in boxes for amazon? it is almost as if we have two separate labor economies. bill: i think we do. we talked about the participation rate -- it is significantly lower than what it was and that is the mystery to all central bankers. related,ographically it is a structural problem, it suggests that boomers are getting older and older and they are training for new technology and theynsignificant do not participate in the economy. it does not mean they cannot come back in but to my way of thinking, absence of significant job-training as they come back

in to lower paying jobs, that amazon is providing. there is a groundhog day like -- what has changed since the last jobs report when you look at the u.s. economy? bill: not much. we've seen inflation stay low and take a little bit lower which is significant. we have seen strong earnings growth in terms of corporations and that is propelled stock market and we see continuing participation by central banks, not by the fed, but by central banks up to a trillion dollars annually by -- to my way of thinking, the economy is important but the euro land economy is more important in terms of inflation rate and growth rate and what the ecb plans to do in terms of timing and quantitative easing

procedures. that the money, the texts have been written in the last five years that are important in terms of financial markets and once that stops to move in at the same pace than i think we will see some change. until then, onward and upward. >> we have seen the u.s. president touting the strength of the stock market. commenting on dow 22,000 earlier this week on twitter and in speeches. how much credit can he claim for how the market is doing today? bill: i don't think much. talking about regulation and deregulation -- there is where he can claim at least some minor progress. it has only been six months but to the extent that regulations beenbeen cut and they have cut significantly, i am not sure exactly where and how they apply in each particular state but, regulation and deregulation -- have been the main boost. it has certainly been from many

of his policies. >> i thought your essay for janice henderson, was superb. you brought up a concept that at the fischer led with economic club of new york over 18 months ago and that is, we miss proportional change. short-term interest rates are set really low and even if they come up a bit, that is a huge portion all or percentage change in the movement of short rates. is that a risk of instability for central bankers in the coming months ahead? bill: i think it is. it is a difficult concept to define. typically central bankers have looked at changes in fed interest rates or short-term interest rates in terms of their absolute magnitude. prior cycles have raised the fed by 300 or 400 basis points going

back to 1981. proportionately since you start low, you double and maybe even quadruple, 2% level in terms of said funds and that has a significant impact, why? common sense says that if you are paying a certain interest rate cover or margin and that margin quadruples over the next few years than that is a significant problem for the interest rate coverage or corporate profits or individual stability. yesterday, carney fully into the conversation with alan greenspan of a few days ago, it is almost not stagfl stag, but a new kind of and a new kind of flation. what kind are they? listened to greenspan over the last few days

and my interpretation, he is suggesting there is a bubble. as a bubble in interest rates and that has to do with real interest rates which are exceedingly low as nominal rates. i would agree with him. i would say that these real interest rates, as low as they are, ultimately, which is the key, create inflation which is the flation part of it. the stag has to do with activity. that is been flatlining for the last five years and unless we can have a higher productivity level in combination with a higher inflation rate over the next six to 12 months, then we tagflation where productivity as low as opposed to 3%. if you are just tuning in, your 10 minutes late, here is the payrolls report. the estimate was 180,000, the

unemployment late dropped to 4.3% and wage growth a little bit better expected 2.5%. the story for the market, the dollar catches a bid, yields ride higher on treasuries and futures stay positive. coming up we bring you fresh reaction to the payrolls report from the white house with gary cohn. the national economic council director. that is coming up in one hour. we count down to the cash open. 50 minutes away. this is bloomberg. on this payrolls friday. ♪

emma: this is bloomberg daybreak. coming up in the next hour, goldman sachs assets management

equity partner. this is bloomberg. jonathan: if you are just joining us, allow me to whip through the outcome. , 200-9000.ort previous number on -- the average earning comes in better than expected. to dig through the payrolls report, allen and michael are here. on numbers like that, you read the reports are you have had 15 minutes, what is the takeaway? >> this is a no drama report. it is on forecast. was strong, restaurants were strong, wage

growth picked up a little bit. probably because it was too low before. there are notes of prizes. markets -- there are no surprises. that is solid for the economy. recovery is continuing. jonathan: is there anything to suggest we could see more wage changes down the road? >> we have had tightness in the low-wage sector. hirings, itngs and is been tight in hotel and restaurants and there has not been wage growth there. we could see the economy benefit from the bottom up. policy could help thereto too. for example, raising the minimum wage in some states or the federal minimum wage which is still at $7.25. we can talk later about some of the reasons companies have been able to hold down wage growth in

spite of market forces. but that is where i would expect to see stronger wage growth forward. david: what would you take away terms of report in putting efforts in terms of growing more jobs and wages? not worry about manufacturing as much? or do you the room -- or do you do the reverse? how do you commit resources from a policy point of view? ofanalytically the future job growth is not in manufacturing. we can stabilize manufacturing. our economy would have been much better off had we not lost 4 million manufacturing jobs in the last decade. it would've been easier to make the transition. i would advise the trump administration -- housing. it seems like they are neglecting housing. construction has been weak. there is pent-up demand for housing because credit has been tight.

they are working to try to relax --ding and credit and debt and there is a responsible way and an irresponsible way to do that. i hope it is responsible. they also have risk -- and reform. they also have major players in the housing market and we can see stronger growth in construction employment and stronger recovery in housing could drive the rest of the economy, appliances, furniture -- that is an area where recovery still has room to expand. jonathan: to the people who would say these are low-quality jobs that are being added to the u.s. economy, what is the data say -- what does the data say? >> it is a mixture. most of wage growth comes about because of improvement in existing jobs not because of the mix. at least in short-term. that is a misleading criticism of recoveries. you want to focus on what is

going on to wages for the jobs that workers are ready have. the markets want higher wages or lower wages? if you look at the bloomberg consensus forecast for the s&p 500, it is $130. embedded in that is the big jump in topline but 100 basis points higher than we have seen in the last couple years. 2.5% or 3% number, that will cut into a lot of profitability for s&p earnings. no question. jonathan: the president releasing his job statement, excellent job statement, i have only just begun. can we keep printing job numbers north of 200,000? >> the president should not treat on this. there is a directive.

for good reason. it goes back to the nixon era because of the pressure he tried to apply to the bureau. jonathan: it is public information. >> that is right but there is a distinction between having career people discuss them and describing what is going on with the data and having elected officials to put spin on it. that is something previous presidents have abided to. jonathan: presidents have always tried to put political spin around the labor market. >> but they follow the directive and waited. david: thank you so much michael purves for being with us here at allen will stay with us for longer. check out tv and you can watch us online and click on our charts and graphics and interact with us directly. go to tv on your terminal. live from your, this is bloomberg. ♪

david: this is bloomberg.

i'm david westin. with the jobs numbers this morning showing 2.5% year-over-year wage growth, the question remains robust employment numbers, we are not seeing numbers move higher and faster. alan krueger is with us and he is just written a paper on non-poaching agreements in the food industry. take us through this. i have a newue and study which we just presented at the national bureau of economic research and what we found is that a majority of franchise chains from fast food , -- outside of fast food as well if you look at h&r block or the companies that will change your oil for you. 60% of these chains have no poaching agreements.

if you own a burger king franchise you cannot higher a worker away from another burger king restaurant. david: and they might be paying them more money which would be wage growth. >> this is restricting competition in the labor market. ,t is part of a broader trend noncompete agreements where employees are required to sign agreements that they will not go work for a competitor did this is behind the scenes. employees are not aware these agreements are being made. this has tremendous potential to suppress wages and reduce worker mobility. the ability to find a job that pays more or has better hours for them or is closer to home. that is part of the reason we are seeing more sluggish wage growth. recently, let's take a look at this bar chart. the difference in wage growth -- the orange one is the people who are changing jobs and the blue

, youe right, indicates make more money if you change jobs more often. the phenomenon, people are not changing as much. >> we are seeing decline, partly because of aging and also anti-competitive practices on the part of employers. which,ects, one is workers are not able to move to higher-paying opportunities when they arise and the other is a more general equilibrium effect. if employers don't face the threat of workers moving to a better paying job they do not have to raise the whole wage scale. jonathan: going back to continues tomp, he say many job stifling regulations continue to fall. is this something the administration can deliver on do you think? >> i think you can reduce some

regulations and strengthen the economy. you can do it smart or in an across-the-board way. i'm concerned they need a scalpel. concerns have been exaggerated in my view. i remember claims that the affordable care act would kill job growth and how many jobs have been created since then, 12 million? that strategy of cutting regulations to increase job growth is not going to change our trajectory in terms of job growth or income growth. david: you are a renowned labor economist. we talk about regulation, we tend to think of federal regulation, there is state and local regulation. to what extent may they be curtailing wage growth and employment? >> that is important. one aspect of state and local regulation is occupational licensing. that has run amok in the u.s.

is it necessary for the people to wash her hair -- to wash your hair at a barbershop to have a license? it is becoming a barrier to entry and preventing people from getting better paying jobs. jonathan: always a pleasure third rate to have you with us. -- always a pleasure. great to have you with us. of blackrock.k in new york city, counting down to the cash open. futures are positive in the opening bell is 30 minutes away. this is bloomberg. ♪

jonathan: the u.s. labor market

hits its stride. a role wage growth exceeds x in its -- estimates. the probe into possible collusion with russia deepens. robert mueller talking of a grand jury. and dan iversen delivers. euros of inflows in the second quarter. welcome to bloomberg daybreak. good morning. i'm jonathan ferro alongside david westin. alix steel has the day off. futures are positive. we are up a 10th of 1% on the s&p 500. the dollar catches a bid off the solid payroll report. treasury yields roll up by four basis points. that is the cross asset pitch. let's get some movers. gettingssing edp, interest from bill ackerman.

he has 8% of the company. is seeking-- effective board control of the company. he is lobbying to oust the ceo carlos rodrigues as well. in 2009 2r changes 2011. we will see if he is successful. we are continuing to look at earnings and cigna becomes the latest of insurers to be estimates. it raises operation earnings. united health, humana, benefiting from the decision to pull out of the aca exchanges. cigna is another example. the companies saying it might still be interested in acquisitions. a lot of these acquisitions sell -- fell apart but the companies seem to be doing well on their

own. speaking of deals, on the buying and, grubhub is share of yelp. its numbersout with any forecast for the full year in revenue. the midpoint is above estimates. on this deal to sell eat24. jonathan: i can't see david using grubhub. of0 jobs added in a month july. the wage growth number is at and, better than estimates for the payroll report. ira.ng us from princeton,

treasury yields higher by four basis points, what is your take away from the treasury report? >> it was strong. it is interesting that the market has gone exactly to where imply volatility said it would on a strong number. market --t what the you look at option volatilities, options on u.s. rates, those have not moved. even though this was a strong report and you have higher yields at the moment, you don't have a market that is convinced this is going to lead to higher inflation or growth because you have one ok number. jonathan: is that the takeaway? that it does not move for the federal reserve at all? >> at least for the moment. the market is pricing for 1.5 interest rate hikes for the next year. runoffket is expecting a

but that is not something that is likely to impact 10 year yields very much. david: from the fed's point of view, does it need to move the dow. -- does thislan give a compelling reason not to stay on a plan? >> this gives them a reason to stick with the plan they had in in september,ch they announced the runoff of their portfolio which allows the treasury department to issue more bonds later to the public because they will have to. the question is, is this enough for the federal reserve to hike again this year, say in december and then a few times next year? up in september, we will get another payroll report, but this might be something the market takes -- pays more attention to. looking at the summary of economic projections in

september and then question janet yellen. she may not be the fed chair next year but we still want to know does the committee really want to hike at the pace that the dow says currently? jonathan: thank you very much for joining us. i want to bring in something i always learn something from, kenny from golden sachs -- goldman sachs equity management. this feels like a goldilocks jobs report. >> bull markets are looking for good news. , one of ourp back key views was that we would see a continued economic recovery. we have not spent a lot of time talking about recovery in other parts of the world. growth a synchronous recovery, covering europe and

japan and emerging markets. that is played out and is very encouraging in the way that we are telling clients to position portfolios which is to stay positioned in risk assets. we like equity over credit and credit over rates but even in that, i would say, we are warning investors to be cautious because we are eight years into a bull market and the obvious question is how long can this last? >> pointing out about risk in credit, these are guys that i've spoken to that keep saying by dit, why is it cre going to equity now? >> what they would say i think is there is still opportunity for credit but they would encourage to size positions appropriately. i know they would tell you we are closer to the end of the credit cycle then when they

first talked about it. be selective. equity from a valuation perspective looks more attractive. the reality is everything is expensive and that is challenging. david: i am not sure you are disagreeing because -- taking risk off evening credit. the spreads are getting incredibly narrow on high-yield or example. should people in the fixed income area be taking risk off the table? >> yes we absolutely think people should be moving off the quality perspective. in the equity market we are late stage. jonathan: iraq got away on some debt this week. 7%.initial guidance was fixed incomes getting dicey in some ways. argentina -- i wonder what it

equity?r does it mean anything when you have that much exuberance in some places in pockets of fixed income. >> we always look to the credit markets. if you see disruption as a catalyst for markets to roll over -- we have had a bull market that has been eight years running, people say equity markets bowl markets -- bull markets don't die in old age. itt being said, i think could dive out to did sickness. what i mean is, on the one hand we have a supportive environment for equities we have credit markets reacting, behaving well, and we have a muted inflation environment which we can come back to an all of this stuff is a goldilocks environment. on the other hand, we have valuations on the medium pe in

the 99th percentile so it begs the question, how do you position yourself in that kind of environment? david: coming back to inflation but more so growth, gdp growth, we have a recovery, but it is modest. if anything it seems to soften a little bit. does that give you pause? you have to have underlined growth for these companies to keep their earnings up. >> i think growth looks decent across the u.s. and the world. there is normally a very strong relationship between unemployment going down and inflation going up. the phillips curve. now it is the phillips curve ball. the relationship is not as strong. growth is ok, inflation coming through, we have to ask yourself why is that and what might change that? standpoints, wage inflation. why are we seeing wage inflation despite a strong economy?

, ifd: would wage inflation you had it tomorrow, would equities go up or down? >> that is difficult. on the one hand you say goes down because margins come under pressure but i would argue that part of our consumer is under duress and when you see wage inflation that should put money back into the economy and that can be good for equity. jonathan: the euro-dollar rolled over and the dax when up. ing europeansee equities and what the currency means for that trade? inwhat should investors do this environment where u.s. equities are expensive and there are not great alternatives? the first up is moving beyond borders for american investors. looking beyond the u.s. and europe is a great place to look. we have recovery there and it is getting close in line with growth to the u.s..

the first quarter was one of the best in many years and the second quarter is shaping up well. growth in earnings is good. is reducing so that is bringing people back to the market and the flow is supportive. -- redemptionon last year from european equities. we like that as a backdrop and we think they should be overweight european equities. david: katie will be staying with us. coming up we will be talking with the blackrock ceo of global fixed income and later gary cohn. live from new york, this is bloomberg. ♪

david: this is bloomberg. i'm david westin. boardroom and then moments of terror and then back to the boardroom. changed after it was said that robert mueller appointed a grand jury. it was risk off across the board as yields tumbled to session lows. we are joined now by rick rieder and katie is still with us. explain what is going on? theye markets react and clawback quickly and we want to ask you are the markets right? >> it is a tough call at the end

of the day. you get a burst of thunder and we move on. this one particularly, you have a dynamic that will play out for years. we will not get headlines tomorrow. you make it a headline about developments but you won't know where this will ultimately end up. markets react instantaneously for a short burst and then we go back to thinking about cpi next week. david: a white house where a fair amount of the staff is spending effort trying to react to subpoenas -- are we so discounting the possibility of washington doing something destructive -- >> the dollar cares a lot. we talk about currency coming under pressure this year, at the end of last year dollar values, talking about fiscal policy, the mechanism is the dollar.

the growth abroad has been faster. no doubt it is the anticipation that we will not give fiscal. can but the security markets are reflecting what you said. david: -- jonathan: the price signal suggesting that there is upside risk from d.c. at the long end of the curve. >> i think that is right. i also think there were a couple of big buyers in the market that drove the back end of the curve yesterday. some may have been a reaction to that. if we do not have tangible news we are goings, through an extraordinary demographic demand for income. if there is a catalyzing event which we will get that will push rates higher, we think in the fourth quarter, if you don't get in, yield in comes japan or europe, back into the treasury gets you yield relative to the rest of the market, you get that poll that is like a

ticking clock without it catalyzes event, it keeps moving. david: -- jonathan: katie, the earnings story we talked about. the third pillar being d.c. it looks like we may not get it now. as an equity investor how do you think about d.c. and folded into your strategy? >> there is optimism in the beginning of the year that we were going to see deregulation take place. part of themall cap market rally ahead of that. now we are on the outset side of the spectrum where people think nothing will happen. in the small-cap space as well as an other sectors that are going to be beneficiary to deregulation, they might be mispriced. they might be oversold. we think those are areas the market should look for value.

when you're talking about equities you are talking about future income. after the election, it was a ramp-up on earnings would take place. -- ift won't a place, that won't happen, what are they looking for earnings now? >> earnings will come from growth. we believe growth will continue to be strong. talked about before, the fact that we haven't seen inflation and we don't expect a rampant pickup in inflation, that should preserve margins. equity markets are at record high valuations but so are earnings. we see enough support to continue that for the foreseeable future. david: rick, where do you see growth? >> we agree with katie. look at these numbers.

we measured growth wrong in the traditional metrics. we think growth will continue. you look at trucking surveys, ip data coming out, we think it will be good. not just in the u.s. 26 out of the 27 big countries in the world are going through an expansion. that is an incredible dynamic. a global poll. ull. we are comfortable. global growth i am not worried about. or the u.s. growth. katie, youick and are sticking with us. coming up on the program, fresh reaction from the white house to the payrolls report. gary cohn coming up. from new york, 10 minutes away from the opening bell, futures up armor and treasuries are higher and the dollar catches a rare bid. from new york, this is

bloomberg. ♪

jonathan: 300 $75 billion and counting, the pension funding gap. that news for retirees. the vast majority of companies are lacking money to set aside to meet future obligations. s&p,e 500 companies in the two dozen have overvalued pensions. rick, how do you think about that theme and what it means for you at blackrock? >> the retirement issue in the world may be the largest issue. closest tohe shark the vote for markets but it is this dynamic that will play out for years. up -- iet rates move don't agree with the thesis of inflation -- the discounting rate is choking pensions and you

created dynamic that is a problem. -- thisrward you need demand for income will be persistent, for fixed income will not go away for a long time. there is an interesting construct, when equities go up, pensions have to rebound and it forces more money into fixed income which is incredible. the demand for fixed income is not a near-term -- some say near-term, we are not going to much higher rates because of this dynamic. not just the u.s., it is much more prolific in japan and europe. jonathan: people think we need higher rates but it may not be the solution. have you think about higher rates over a goldman sachs? >> are fixed income team is expecting a rate increase in december. upthink inflation will pick

and create the environment for one to rate increase for the rest of the year. i agree completely with rick's comment. if we get rising rates that will be positive for the pension area. it is good in terms of bringing down the pension gap. work on return seeking assets. i would argue pensions are facing the same problem is all investors, where can we find return in this world? >> iraq. high yields there. are the markets properly pricing in? is there real discernment from companies that have this problem and those that don't? >> this lends itself to the benefits of bottom-up stock selection.

this are companies where is a serious issue and it could start to impact earnings. that is the importance of doing bottom-up do diligence at the company level to understand the dynamic. david: you look at the equity market and who has performed this year, companies that bear , --burden >> they don't have this latent pension obligation. i would argue there is a commerce evolution in the world that is part of it. david: is this just a matter of, it will work its way out? a lot of companies have restructured pension. as the population ages, more slowly than we thought, is this a temporary problem? >> it will work its way out because we are not increasing db and aggregate and large pension

markets around the world. i think companies that are not burdened with those liabilities are companies in the market that are doing the best. technology, there are many reasons it is doing well, but it is not being burdened by this. katie and rick staying with us as we count down to the opening bell. we are four minutes away from the open. futures are positive up a quarter of 1%. up about a 10th of 1%. we grind higher on the dow index. yesterday for a seventh or eighth straight session. this is bloomberg. ♪

jonathan: the opening bell 25 seconds away. let's look at the stories for you. payrolls friday. upsize -- upside surprise.

a drop down from the previous month, a story that the market is risk off. futures are confident on the dow after an eight-day winning streak. the s&p 500, we drive higher, futures up by 0.13%. all of this ahead of the cash open. here is the story on the bond screen. yields higher by 3 basis points. yields have been grinding, grinding lower through much of the week. the dollar, just something a little bit of a novel thing. it catches a bid. 93 on the dollar index. euro-dollar taking some pain. let's get you your cash open. let's say good morning to julie hyman. julie: it is amazing come of the smoothing effect of a jobs report on the u.s. dollar and u.s. stocks. what we have seen today is something we have not seen in several sessions -- all three

major averages going up at the same time. the dow has been the leader. we have seen a divergence between the dow and the nasdaq and between the s&p 500, as well. we will see if the s&p and the nasdaq can push up to the dow level, which we have not seen then retain -- them retained. we still love earnings in focus, aside from the excitement of the jobs report. they are pushing some stocks higher. continuing tos benefit from the oprah effect. coming up with earnings that beat estimates. subscribers up 20%. the shares are surging. they have been in recovery mode since oprah invested in the company and started touting its continuing to benefit from theproducts, althon , but it hasovery been mostly higher. the ceo was on bloomberg earlier today talking about some of the new initiatives the company is taking.

speaking of new initiatives, gopro beating estimates. revenue of 34%. the company has been cost-cutting in an effort to turn itself around after some recent missteps. speaking of newsoftware updateso reinvigorate the company. $24.tock ipo'ed at it has not seen that level since late 2015. etsy, its first profit since the first quarter of 2015. sales will rise at a faster pace than last quarter. investor pressure has led to some changes at the company, including at the top of the company in management, and that looks to be working at least for now as those shares rise 14%. are we going to continue to see the rally in stocks overall? an interesting chart looks at the decline line. how many stocks are going up compared to how many are going down. the s&p is in white. it has been flatlining recently,

even as the advanced decline is going down. not many stocks are going up compared to those going down. this might be able to tell us something about the momentum of the underlying index and whether it can retain those records. jonathan: thank you, julie. two minutes into the session, stocks charging higher. the dow cracked 22,000 yesterday notched its33rd -- 33rd all-time closing high. it on pace for the most in a single calendar year. the dow has hit a new high roughly once in every four trading days this year. meant to be a program for the sophisticated investor, so when doubt 22,000 comes up, we don't pop the confetti and go all crazy. [laughter] jonathan: i will ask you how important and relevant that number is for you.

katie: i use that example of high-altitude before. i think psychologically, people standing atop 22,000 will think they are high up and there is a long way to fall thomas of the psychology does play into that. i think we need to be cautious at this level of equities for the u.s. where we see indexes at more reasonable valuations, we talked about europe before. japan is another place we are looking for rate value in companies. if you look at japanese companies in at get, they are trading at a discount spread to the u.s. as wide as it has been for the last 20 years. you have a lot of interesting trends. automation, electrification of cars and a great corporate governance environment. roe's are going up. you can make money even if topline is not hugely positive. to fan is a place that we see opportunities and equity markets. jonathan: a lot of people think

about whether things have gotten frosty. they are talking about it in the world of fixed income. what do you say to the questions about it? rick: it is getting frothy, that is part of the reason why the equity market is going up. free cash flow is attractive relative to the discount rate. tot drives the equity market a large extent? rates are going to stay moderate . we are going to be in a low rate environment for a while. think therecome, we are still ways to make money. most fixed income funds have been around for years. there is still value in places like mexico or indonesia, so we like the emerging markets. we'll select securitized assets. -- we like securitized assets. credit markets have gotten full. we still like parts of the investor-grade market. the demand is still persistent. you can still make money in fixed income. it has had a good here.

i think going forward people have to go more global. you got to go more global because that is where the opportunities are. you have to think where you get your cash flow from. david: we had your friend mohamed el-erian on right now and he would say that is because there is a lot of liquidity injected into the markets overall. we that asnt are that liquidity starts to be withdrawn, even if it is gradually, we know the results? we have never been in this position before. rick: that is 100% right. there is a real timing to that. the next supply of fixed income is very narrow. the fed is reducing their balance sheet $10 billion per month, that is not that big of a deal this year. the bank of japan is not going to slow down in terms of taking assets out of the market. we are still in a position where , in 2017, even into 2018, where the liquidity is still terrific.

i think it is broader than liquidity. people more and more are getting the fact that the demographic is so profound, the demand for income is not going away in the next few years. david: a global phenomenon. to what extent will what you are describing the ameliorated? it may have to borrow more money because they are going farther into debt soon. rick: what happens is that now as you get into 2018, real rates start to drift a bit higher because you are changing the funding mix. you are starting the move toward treasuries. it does start changing. part of why i believe rates can move is because of what you said. we are starting to change the mix a little bit, but it is going to be slow. the story is one of longer duration and i wonder how critical that is for investors when they are not going to get it from the treasury market. why lock in low rates at the long end when you can carry on

and the market will suck it up at a lower rate? for treasuries. rick: it is a complex question. part of what you are supposed to do is term out your debt. if you have a normal term structure, that will keep your rates down. when you think about where we have been the last few years, if you can issue a limited amount of treasury bills, why would you charge taxpayers for that? we are going to move the front end of the curve up. the end of the curve is very flat. jonathan: for the investors out there in the pension funds, you mentioned the u.k., i was jing -- just thinking about the gilt market and how much longer it is, that spread is not closing anytime soon, is it? rick: definitely not. that is why the gilt market is such a technical market.

the persistent long end in the gilt market is so extreme. the u.s. pension fund, how it funds housing, the mortgage market, you can start to change that dynamic, but that gap is not going to close anytime soon. katiean: rick and sticking with us. in the markets, let's bring us you the -- let's bring you the stories right now. the s&p 500 grinds higher by 5 points. what did you call it, altitude sickness, katie? [laughter] jonathan: happy friday. you are watching bloomberg. ♪

emma: this is "bloomberg daybreak." coming up next week, kathleen bullard atiews james the 12:30 on wednesday. jonathan: that $2 trillion bet by germany's leading insurance company is starting to pay off. pimco received a record $250 billion in inflows -- euros, rather. future of the bond firm, we zpoke to the cfo at allian earlier. >> i will not make a forecast for help and co-is developing. and wont has to be done

every week. rick, never mind passive versus active, if you make money, the money will chase you, that seems to be the take away. rick: at the end of the day, fixed income money this year, our funds, money keeps flowing into active parts of the market and it is flowing into passive. i think there is a realization is that in money markets, you can get beta effectively and it is going to keep growing. where can you create durable outflow? where can you create persistent returns? i would argue that active and passive are continuing to grow. jonathan: does the money going to passive strange --change the structural story? katie: that absolutely has. the velocity at which money is moving into market cap makes me a little bit nervous that when we do get this unwind, it could be worse than it has been in had periods because we have

so much of the market crowded into similar sectors. that encourages some differentiation in your equity portfolio. passive along with active, but having price discrimination is really important. the number of assets that have gone from passive to active has gone up to about 37% and it is probably going to go up to 50%, just a fun fact for you -- in the equity markets, there is actually more indexes then there are individual stocks. you should pause and reflect on what that means for investors. [laughter] david: she talks about structural changes. some people say that is one of the reasons for the reduced volatility. do you see that? rick: it has to be. you have money that is going to flow to a relative index. i think there is a bigger influence people don't talk about as much. what drove the volatility of -- what drove the

volatility was energy. you had oil that shifted and you are shifting the discount rate and the interest rate with incredible force. now you have equilibrium in the world around energy, you have other forms of energy in the world that you can't have an inflation spike now driven by energy because you have different rate coun, how it movest -- count, how it moves. the volatility of inflation has fall off a cliff and it has been right alongside -- by the way, it affects the currency market, as well -- it is because the volatility of energy has changed so dramatically. you can talk about a lot of things that have kept volatility down, but it is also when you have stable inflation and you keep the discount rate down, it can beeo's and cfo's more confident in their investment paradigm and it has to bring volatility down. david: right alongside that

development is the development within the stock market in how much energy stocks are weighted versus tech because tech is no driving us as opposed to energy. do you see a shift in the equity market? katie: absolutely. the spread and returns between the technology and energy sectors is 31%. we continue to be quite positive on technology. as i mentioned before, valuations are not that stretched. it is only about at a 5% premium to the rest of the market. if you look at the real tech bubble that started in the late 1990's, it was at a 200% plus premium to the rest of the market. technology still offers a lot of great opportunities, especially because of the major disruptions that it is bringing within the sector and across all sectors. i want to ask you the following jonathan: i want to ask you the following question. marginal growth and how that has changed over the last few years. rick: massive change. capex, capex about

has been growing marginally. a lot of it gets into technology. capex is growing. we don't pay the same for a computer today as 10 years ago, but a lot of that is going into r&d. companies are getting more efficient. software equipment, automation, bring your cost structure down. big deal. david: a special thanks to rick and katie. if you have a bloomberg terminal, check out tv . interact with us directly. this is bloomberg. ♪

the upsideollowing surprise on the payrolls report. solid jobs report in the united states. futures positive. up by 53 points on the dow.

up by 7 on the s&p 500. yields higher on the bond markets. the dollar catches a really decent bid. the cable rate comes down. euro-dollar down about 0.5%. on thewe are all focused payrolls numbers out earlier today. perhaps there is no one more focused in the country then gary cohn. he joins us now from the white house. welcome back to the program. >> thanks for having me. thed: we have already heard president say they are really good numbers although there is more to come. give us your stance in the president's on how you look at these numbers. the president is completely right. these are good numbers. 200-9000 nonfarm payroll jobs. 209,000 nonfarm payroll jobs.

we are bringing americans back into the workforce. the president is doing. that is our objective. we have done that without our major policy initiatives being able to take place. number one policy initiative is to deregulate the u.s. environment. we still have not gotten most of our nominees through the regulatory process. we got a couple through yesterday in a big package that went through. we got some of our members .hrough for the cftc when we get the other members through, we are going to be able to continue deregulating markets in the environment to continue to invest capital in the united states and we can continue to create great, high paying jobs in america. this is all about not only growing the economy, but growing it to create great, high paying jobs for americans and bringing more and more people back to the workforce. that is what the president and i are committed to do. david: let's talk about the high-paying jobs. wage growth is up 2.5%

year-over-year. a lot of us find that rather tepid. how do you explain this phenomenon where we have really robust employment, some people thankful employment, yet we are not seeing wage growth? the one month's annual allies and higher than the 12 months. annualizing higher than the 12 months. we would like to see some wage inflation in the system. wage inflation means we are putting more income in consumers ' pockets. when they have more income and we lower the tax rates, they will have more money to spend, driving more economic growth. that is what we really want to see. we need to create the jobs. we need to create the jobs by getting rid of the regulation that is bogging down industry. we need to reform the tax code to incentivize companies to invest in america. that is what we are trying to

do, we are totally committed to doing it, we feel confident we can get it done before the end of the year. jonathan: you inherited an economy where the headline numbers for the economy look solid. we have not seen the wage growth we thought we would over the next few years and it is starting to create in. -- the next few years and it is starting to creep in. do you think there is some spare capacity, some slack in the labor market? gary: i think there is. i think we can bring more americans back to work by creating jobs, creating incentives that make it easier for smaller and medium-sized businesses to go. making credit available, getting rid of regulation -- we do think there is much more of a potential to bring people back into the labor force. jonathan: you pointed out some structural issues, do you think the issues are quite cyclical predominantly? gary: we argue that all the time. what we are committed on right

now is to create the best possible jobs environment we can create and we really do know that when people think about investmentapital and capital is what you need to grow the economy, people look at regulation and taxes, two of the main driving factors. those are two factors that we are spending enormous amounts of time on making better for anyone that wants to invest capital in the united states. beforewe talked to you about the plan. you cannot is a group of six, with the outline of a plan, where are you on that plan? when are we going to see the specific legislative liquid? gary: you are right, the group of six continues. we put out a note last week that shows how well-coordinated the six of us are, how we all agree on the skeleton of the tax plan. we are now working quite actively with the house ways and means committee and the finance committee in the senate to get some muscle structure on the

skeleton, to really drive tax reform to where we have to drive it. we are going to continuously meet over august and hopefully be able to deliver a comprehensive tax bill early in the fall. david: is that september 15? gary: that is early in the fall, but there are a lot of other dates that are in the fall, as well. david: how confident are you given all the difficulties that have been occurring in congress that you are going to get this through this year as your goal? gary: look, i think the members of congress understand how important tax reform is. if we are really going to drive the economy and drive economic growth and get from the modeling 2% to 3%, then we have to do something structural to the u.s. economy. reformd about regulatory , we have to change our tax rates. we cannot be substantially higher than the oecd average tax rate out there. a 35% tax rate against a 23% oecd average tax rate, 13%

higher just does not make us competitive. we have got to get in line with the rest of the world. we've got to entice capital to be invested in the united states. jonathan: we caught up with mohamed el-erian and he talked about the much-needed handoff from all of -- monetary policy to fiscal. do you think we rely too much on monetary policy in the united states? gary: i don't think this is a u.s. issue. i think globally, we have been dealing with the monetary policy, fiscal issue from the 2008 financial crisis. central banks did what they were supposed to do, but we do have to transition the economy to a more normalized system. jonathan:require -- does that require a handoff? gary: we can help by removing barriers. we can help by making it easier for capital to flow into the united states, we can get a more competitive tax system, we can remove regulation that stops capital from coming into the united states.

david: as you go back to your office in the white house behind you right now, what will be your number one priority? today, are you more confident in achieving that or are you less confident since the day you walked in? gary: my number one priority is taxes. my second priority is taxes. if you are confused, my third priority is taxes. jonathan: gary cohn. we did not get to ask him whether he would be the next fed chair. i'm not sure gary would want to weigh in on that today. [laughter] jonathan: coming up next week, a big lineup of guests. for me, if i was looking for a subtle read as to where gary cohn is thinking right now on what kind of fed chair he would be, if those comments stay consistent, the idea that there is a bit more slack, but at the same time maybe the game is up with monetary policy, and the handoff to fiscal needs to happen.

david: that is what i took away from it. the emphasis on fiscal. he agreed with mohamed el-erian on that. he would say the same thing. it is ironic if he were to end up with the fed. jonathan: we had payrolls about an hour and 30 minutes ago. upside surprise on the main headline number. 209,000. the unemployment rate came down to about 4.3%. wages with an upside surprise of about 2.5%. we caught up with mohamed el-erian a little bit earlier on bloomberg tv ahead of the numbers and talk to him about the federal "bloomberg markets"t

now. ♪ >> it is 10:00 a.m. in new york, 3:00 p.m. in london him at 10:00 p.m. in hong kong. i'm vonnie quinn. barton.ark welcome to "bloomberg markets."

♪ vonnie: fear other top stories we are covering from the bloomberg and around the world -- labor markets showing some strength. payroll came in at 209,000. wage growth, a little higher, as well. is it all enough for a rate direction for the u.s. economy? bill ackman is taking aim at payrolls. he wants effective control of the board, can he make that happen? trumpitics, president starts is working vacation as special counsel robert mueller is set to have impaneled another grand jury in the rush investigation. attorney general jeff sessions has given a news conference on the investigation into leaks