it is jobs day in america. the 87th consecutive month of job growth, but wages are the real warrior. plus, a new year rally. global equities, every named u.s. equity index sits at a record. all apple owners, the companies of all macs, apples, iphones are affected by the big security problems. david: it is jobs day. i am david westin alongside alix steel. i guess the jobs day is pretty good. alix: yes, i guess, unless you look at the dollar and say, i do not know, i do not really love it. one and a half hours until the jobs numbers. s&p closing at a record yesterday. weaker.lar slightly the euro has been stronger. we have weaker inflation print in europe. the dollar a little bit stronger then heading into the jobs

number. don't forget yields at $2.46. a tear, and crude a little bit down but still above the $61 level. david: emma chandra is here with first word news. emma: thank you. north korea has agreed for the first talks with south korea in years. the winter olympics are being hosted by south korea in february. north korea has assigned a delegation to the games. environment to ask the trump thenistration's -- fight trump administration's plans for offshore drilling. the obama administration gave up on drilling rights. in the u.k., productivity rose in the fourth quarter by the most in more than six years.

still, british products is barely higher than 10 years ago. global news 24 hours a day, powered by more than 2700 journalists and analysts in over 120 countries. i am emma chandra. this is bloomberg. david. david: thank you so much. time now for our "daybreak" first take. first up is of course a jobs day. second, continuing the new year tear, and third, the chip program has affected apple. alix: joining us now is carl riccadonna, the head of economics, and another guest from bloomberg news. 190,000 jobs is where the consensus sits for unemployment road. -- rate. a big snoozer if you compare it. carl: the economy has shown a bias toward acceleration in the bathtub -- back half of last year.

we will be a little bit below consensus. i certainly think it is possible. until we see because of workers go out, then if the economy is growing more ugly, we should see a faster pace of hiring as well. we have 2.5% year-over-year, is that enough to draw people out from the sidelines? it isi do not think drawing people from the sidelines, nor is it the touring employers -- deterrin employers from hiring. as the year wears on and we are talking about a sub-4% unemployment rate with the labor scarcity issues and rising labor costs will lead employers to moderate. alix: do they care today? i am a little bit of a snoozer. no offense. by the way, tune in in an hour and a half.

[laughter] very possible that the market does not care. is bringing us to closer to full employment where we should have more of the wage of nation spirals, the scare that may get you to read price equity valuations, or we are getting closer to seeing our star go up and have the more free growth that karl was talking about. when i look for on that basis is we see growth, weekly earnings growth, payrolls growth. year on year,% the strongest faces january 2016. if you're looking for strength in u.s. consumer, that is a great number to watch. also watching labor force growth. we are doing a pretty good job of keeping pace with retirement of the people who aren't in the labor force coming in, going straight into a job. that is something that really has kept the momentum and the

top number going and is sort of a drag on wage growth. alix: let's talk about markets. take a look at this bloomberg care. this is a 60/40 balance balanced, basically parity, and it looks at the performance that we see on a risk parity index on a daily basis. the best three days versus the five-year average in a month, meaning everything is rallying. the last three days are better than one month returns. >> that is a pretty impressive move. it speaks to the idea that the calendar changed, but nothing else did. we have seen the stoxx do very low in the early going of this year. we have seen things like tlt, gn k get inflows. it is a new year, same diet for investors. alix: carl, is that the story? carl: i call it goldierlocks.

bonds love it and stocks love it as well. the dollar i think is going to be something we really have to watch a lot this year. the first couple of days of the year certainly do not establish a trend, but if we have the fed unwinding its balance sheet at a faster pace, that would potentially attract more foreign capital in this global search for yield. also, what various provisions of the tax reform do with the on shoring up funds. all of these funds back in the u.s. could create demand for the dollar. i suspect the dollar will stress over the course of this year. i have not particularly discouraged by the first week of the year not confirming that trend. david: the dollar may strengthen your at will happen with iphones and ipadss. the first story i have today coming remember the chip problem yesterday with intel? it affects all of our iphones,

ipads, mac around the world. luke: it is very clear lithic take across the board has a major quality assurance program. -- problem. sometimes it is in terms of facebook, sometimes in terms of apple. this it really is not a problem after all if we tweak it away, or this is at least emerging pressure to seek higher quality, or we get higher prices. should havee this some kind of change that should be reflected in the market. this: the fact that affects everyone, reduce on apple because it is not like you go somewhere else and by somebody else's life of. -- iphone. luke: that is a good point. alix: apple premarket is up by .1%. are you worried, carl?

carl: i always worry about cybersecurity. [laughter] david: very wise. deeperup, we will dive into global markets equality with evan brown of ubs cured and jim bullard, the st. louis fed president, that will be coming up soon without colleague, mike mckee. this is bloomberg. ♪ this is bloomberg. ♪

emma: this is "bloomberg daybreak." i am emma chandra with your bloomberg business flash. former over ceo travis kalanick plans to sell stocks in uber.

he owns about 10% of uber. of greenland say -- work to say they will acquired all. the attempt failed. dole may be valued at $2 billion. anticipating in a 2% rally in europe this year, that would be the consummate's best performance -- continent's best performances 2009. it would be the best relative to the u.s. in 13 years. that is your bloomberg business flash. david: thanks, emma. nonfarm payrolls are forecasting 190,000. with the dow topping $25,000 for

the first time yesterday, the s&p and nasdaq also reaching all-time highs. joining us now is evan brown. welcome, evan, good to have you here. evan: thank you. david: first of all, what is the jobs number? around 200,000, but we think it is important to focus on wage numbers, 2.5%. more than the actual jobs numbers, people are focused on inflation. a quarterjobs rising, of 2.6%, 2.7%. david: if you get above that, people start to get concerned? evan: we start to see a little bit of a trend, if you start to see wages rising above 3%, one number is not going to change too much. the bond market could get a little jittery. alix: justifying the rally we have seen and stocks? evan: yes, so global growth. every time we get these global pmi's coming in, people think there is a way to moderate, and

they continue to surge. acceleration is justified on the growth story. alix: here is what i do not get, though -- the dollar. it could be a surprise index for the u.s., and they are diverging. mica said, global growth, it keeps going up, the dollar keeps going down. what is your explanation for the weaker dollar? everyone has their favorite. evan: [laughs] if you look past the fed tightening cycles, usually the dollar is the first hike in that has a trend depreciation thereafter. the reason we think is that as global growth is improving, u.s. investors start to look abroad for returns. they start to invest more in europe, in emerging markets, and we certainly saw that in the last tightening cycle in 2004, 2000. you're beginning to see it in the data.

definitely equity flows going into markets outside the u.s. david: i want to hear what you think about the dollar this year. follow the terminal in the control room. this actually shows what the dollar has done this year and what analysts have predicted. down is the blue line, the white line is the analysts reaching a consensus. it down cannot take fast enough. what if it is wrong? with the dollar is stronger? what does that do to markets? f the dollar is rallying because there is a surge in inflation, the fed is going to be tightening much more aggressively, then that will be a concern for markets because it has been based on the fed's accommodative policy. or if there is a recession, the dollar might shrink. if it is a gradual depreciation of the dollar, some gradual fed tightening, that is a little bit more. alix: s&p forecast 3150 because it is big.

is that a realistic number for you? evan: i think it is absolutely possible if the economy continues to perform, we are still pricing and tax reform, as long as the rest of the world, global of this showing that kind of momentum, that is a reasonable target. david: what is the biggest rest? -- risk? tightening.l banks if they start tightening a lot faster than the market expects. alix: all right, evan brown of ubs asset management, you will be sticking with us. coming up, we will these speaking -- we will be speaking with jim bullard just before the jobs numbers. this is bloomberg. ♪ this is bloomberg. ♪

cerberus -- alix: this is "bloomberg daybreak." i am alix steel. equity markets are ripping, the

dollar is stronger, commodities take a little bit of a pause today. every january, the american economic association, in conjunction with the allied social science association, holds a three-day meeting. with economic minds. michael mckee is one of them. michael: good morning, everybody come on bloomberg television and radio worldwide, from philadelphia. of course, the field-like temperature is 6. appreciate jim bullard getting here this morning. slogging through the snow, sleet, and highways. i am originally from minnesota, so this is nothing. [laughter] michael: this is true. you are well known for the regime to view of the economy. the economy is picking up. we are starting to see a few wage gains. a tax cutng to get

stimulus of one sort or another, so are you any closer to changing your regime and then looking at the need for additional rate cut increases? mr. bullard: we are certainly keeping our eyes open on this, but on the tax cut issue, i am of approaching things that a lot of deficit spending has a lot of impact on the economy, or if it does, it should be temporary. the interesting part about the tax cut is whether it will rise productivity higher in the u.s., drive business investment higher in the u.s. if it does, i think we could get some gains out of that because jobs will move up the trend growth rate for the u.s. economy. that will be good if we can get that. but i feel it for now, we can be wait and see as far as monetary policy goes on the. also, in the trend growth world, a couple is a big deal. in the world of watching gdp from quarter to quarter a couple

of times does not really register. i think it will be hard to disentangle over the next couple of years, whether you are getting it on the trend growth rate or not. if you are, that would be important, but it will be hard to disentangle it from the data. michael: so you are still locked into the same regime and no rate moves? mr. bullard: we have got the low regime, and we are keeping our eyes open. my baseline cases we are still in the same regime. i think there is some responsibilities at this could light a fire under investments and really drive growth higher. happens, we would sort of take note of that and adjust policy appropriately. michael: that begs the question of what your growth forecast is. for 2017, we were surprised to the upside of growth. now it looks like the first half is a little over 2%, but the

second half is now looking like it will come in at 3%. so you will get 2.5% or a little better for the year. the is in a year where trend growth rate is only 2%, so this is good. expansion, so the i think the natural thing to forecast as you would slow down from here, but then you have got this tax effect coming up, so maybe you get a little bit from that. so we are keeping -- we're still in a low 2%'s for 2018 and then slowing down the trend as you go forward. the race to question of whether we will get any inflation of any significant acceleration that would create a need for the fed to move past or stephen. -- steepen. mr. bullard: on inflation, we made no progress in the last two inflationrd our target, at least based on smooth inflation,res of less food and energy, 1.5

year-over-year, that is a low number. it is the same as it was in 2015. 5% inoyment went below the fall of 2015, so even two , we really have not made any progress at all. i do not think we will get any kind of phillips curve of fact that people so emphasize. long ago, youhat have the natural rate of unemployment, so you have the 5.5%. we are now at 4.1%. we have a jobs report coming out this morning. we have not really seen any inflation out of that. i think the commodified are story about the phillips curve is either nonexistent, or whatever it is, the pile there is really small comparatively. michael: janet yellen and jay maybe weth of said need to look at our model of inflation dynamics. do you think something has changed -- will be fed change the way it looks at making policy?

mr. bullard: if you look at the graphite used yesterday about the disappearing phillips curve, the coefficient on the economy has been declining ever since the 1980's. that is an analysis by the bank of international settlements in their national report. i think there is widespread. -- there is widespread agreement on the appearance of this that the alex kirk is very flat, and their -- the phillips curve is very flat. i will say they have moved up slightly in the last 60 days or so, so keep an eye on the. -- that. in your what are ceo's district saying about that and about what they will pay their workers? mr. bullard: ceo's are very positive on the tax bill. they think it is -- and it makes total sense.

it was all focused on corporate tax reform, so if you are going to tax the earnings at a different rate, this is going to raise the value of the company. this is why the s&p 500 is up -- at least part of why it was up in 2017, in anticipation of that. so i have some sympathy for the idea that you would get this investment boon coming out of this tax policy. the only hesitation i have is that firms also had a lot of cash already and could have done it before, and they really were not investing at the same pace. they have not historically for we will see how it goes. as a monetary policy maker, i think with inflation pretty low, i can afford to wait and see and see if the rate happens or not. be runninge cap may 2% lower than historical average. is anyone in your district telling you we need to expand? mr. bullard: certainly some have

expansion plans. certainly some do want to go ahead. i could see the corporate sector saying to themselves this is a good chance to make money and take a risk on the big billion dollar project that i was not going to do before. they may go ahead with that. i am in wait and see mode. aspect of thether tax bill it is concerned some of your colleagues is the large deficits it will create. are you afraid of a crowding at, a rise in interest rates, lack of capital available for the private sector? mr. bullard: no. the $1.5 trillion number is over 10 years, so you're talking about $150 billion per year. i am not a big one for the effects of deficits on rates. i think that is hard to find. environmenta global

, the total debt story. safeave a shortage of houses globally that is having a big impact. you have low rates around the world that is having a big impact. i think the biggest issue with hass is that the 10-year traded in a range for quite a while, quite a few years here, and then you have got the two-year rising pretty genetically, so the yield curve is flossing. michael: are you concerned about that? some people are worried that if the fed goes too far, we will see that. mr. bullard: the effect of the two-year spread is now under 50 basis points. the reason it is falling is raisingthe fed is rates, so i am not really interested in trying to raise rates all the way to the point where we i in view the yield curve.

3% and headings to 4%, i would want to get out in front of it. we have not made any progress on inflation in the last two years. i think this yield curve issue is a bit -- is important. there are a lot of opinions about it, but we should give it due consideration, and we should have the debate now, not later this year, when it is even flatter. michael: but is it is i'm of the recession is imminent? mr. bullard: i predicted the last three recessions. i have a graph on that. michael: do you think a recession is imminent? mr. bullard: certainly not right now. everything is fine right now. the question is -- how are you going to play this in 2018? will you raise the policy rate all the way to the point where you have a completely flat yield curve or inverse the curve?

a lot of things could happen -- we could raise the rates, and it is not a problem because the 10-year goes up in tandem, and hopefully the yield curve stays the same. that would be fine if that is what happens. if you look at the last four years, the 10-year really has not been very high, and you kind of wonder in your mind how you will get that rate to be meaningfully higher than what it is for the rest of the developed world. michael: before we let you go, we have to ask you about the changes that are coming to the federal reserve in 2018. do you expect any change in policymaking or communication under a jay powell regime? mr. bullard: i do not know what jay is going to do, but anytime you get this kind of turnover, that is a great time to re-examine what the community is doing. i think jay would probably have some sympathy for that, but i do not will know what direction -- i certainly would not want to pin him down in what direction he will go in.

you have got press conference issues, so i think they could be considered here. michael: there is a big conference in washington on monday asking whether the 2% inflation target is still a worthwhile fed policy. how do you feel about that? mr. bullard: i think the 2% target is quite important and has been very beneficial in keeping inflation low and stable. if anything, keeping it too low into stable -- and too stable. i would not want to mess with that. put i would want to do is something in place where every five years we thoroughly review the inflation target and think about why we have it and what we think it should be-. the bank of canada does this, and i think it is best practice right now. the fed could adopt that. we could do that on a calendar basis and not let it interfere with the day-to-day monetary policy. we could do it in a way that is a thoughtful couple of day retreat reflecting on it or something like that, and then

coming to decision. can we do it someplace warm? mr. bullard: i am thinking in the southern united states. michael: jim bullard, thank you for joining us today. we will send it back to you on bloomberg radio and television worldwide. alix: that was michael mckee with jim bullard. imagine that happening on the backdrop of hawaii. david: jim bullard was pretty mild. he does not think there will be a big effect from the tax cuts and thinks we are on track, not a lot of inflation. alix: he is one of the dovish members. david: has become. alix: and he continues to be dovish, but on the margin. there is no recession yet, but worried about the yield curve. really categorizing the economy in a weaker sense in that light. david: he said we can afford to

not move too quickly because inflation is not there. alix: the asset prices might say something different. one hour before the all important jobs number, a really strong rally. equity rally across the board. the last three-day rally for the s&p has been the best since 2012, the last time we saw a start -- a rally in the start of the year. futures grind higher. donald trump even tweeted about that. an upgrade of the auto sector in european stocks, driving equities. , the biggest 1% winning streak in about two months. you are seeing a little bit of touchve, the dollar a stronger, but it has been a grind lower for the dollar this year, sitting at $1.20.

print,g, 1.35 is how we but we had u.k. productivity coming in the highest in six years. 1.35, when did that happen? modest selling on the margin for the 10 year, and commodities taking a break after a good rally this year. david: it is time to get an update on what is going on outside the business world with emma chandra. have agreedo koreas to talk about reducing tension ahead of the olympic games next month. kim jong-un has excepted and proposal -- accepted a proposal to discuss on tuesday. they will be the first formal talks between the country since 2015. bannon'sout over steve comments in a behind the scene book about the white house. his major financial backer cut ties with the former white house strategist after speaking on the

phone with president trump, according to people familiar. a high-profile conservative party mp and brexit rebel has made a case for a second referendum. he says as opinion polls suggest, 80% of the u.k. thinks brexit is a mistake and that may be a reason to take a second vote. he says it is unlikely public opinion will sway that far against the e.u. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i am emma chandra. this is bloomberg. alix: are you going to buy mike goebel's book today? david: i feel like i have heard everything in it, i am not sure i need to buy it. alix: euro-dollar weaker after euro area inflation slowed. butend of qe is in sight, european equities on their best winning streak and about two months.

citigroup sees european stocks beating u.s. stocks with the most in annual performance in about 13 years. evan brown of ubs still with us. how did you look at the asset data question mark evan -- that asset data? evan: this shows that the ecb is in no rush. they are on autopilot, and policy will be quite accommodative for a time. alix: are you of the mindset that we will see more strength in european equities, or a pause and we will have to prove some growth? evan: i think we will see more strength in european equities. we talked earlier about growth revisions higher. there has been nowhere except europe where that has been so strong. fact, european growth is almost double potential growth

in europe. so that in itself is going to attract inflows. people are feeling much better about the cyclical upswing. what will matter is the speed with which the euro appreciates hear it if it appreciates to bring fast, it can weigh on earnings. we have been hearing for some time that european stocks are undervalued, and people coming on this program saying you should buy europe, and yet it has not happened. why? evan: at least now you are getting the earnings surprises, you're getting the growth, you are getting earnings rising. he have had years and years of earnings disappointment. it is kind of like you are finally getting the confirmation. david: europe was underpriced on a price ratio already, so why has there been a discount? evan: some of it is the easing of political risk ramy a in

europe. we had the system -- risk premia in europe. we had the systemic risk of countries leaving. the upcoming election that we have, the italian election, we do not think that presents a systemic risk. it would be difficult for a eurosceptic party to gain power eases,, so as that risk that should help european equities. alix: let's talk about theciti -- let's talk about the citi call, the best performance of european stocks relative to the u.s. in 13 years because everyone is underestimating economic recovery in europe. goldman sachs says the stocks are so did dependent -- dependent -- which way do you see it? or do you have a third way? evan: i would say we are closer to the view that european equities have more to perform.

in local currency terms, i am not sure they will be the u.s.. we mentioned a very positive view on the u.s. economy and on tax cuts, but as a dollar-based investor in european equities, you do get the euro appreciation which we are expecting to be pretty gradual. we expect the earnings story to come through, so european equities should do quite well. not quite sure they are definitely going to outperform the u.s., but they will be just fine. david: how much of the rise in european stocks has been just fx? evan: last year, european equities in local currency terms were disappointing relative to the gains that you saw in the u.s., japan, and emerging markets. i think a lot of that was because the euro rose so fast after you -- after the european election that it weighed on earnings.

it is the speed of the euro move and why. if it is moving higher has it is attracting equity inflows, that is a good thing. if it is fast appreciation because it looks like the ecb will be tightening quicker than people expect, that is a different story and a key risk. david: evan, it was really a pleasure to have you. yesterday, we reported on that thatdesign vulnerability could give hackers access to all sorts of information, particularly in the icloud, but apple said the flaw raises issues with all the macs, ipads and i -- iphones being used across the world. we talk about this with jeremy khan from london. it applies to all the iphones, 700 million iphones sold around the world. what is the problem? these: all the chips that

-- that are used in these devices have a fundamental vulnerability that would allow an attacker to steal almost anything that chip has in memory. all the vendors, all the companies that produce computer hardware are basically in the process of trying to update and patch their systems. apple was quiet about this early in the week and came out and said, this affects all of our hardware as well with the exception of the apple watch, which is based on a different chip technology and operating system. everything else is affected and will have to be patched. david: i owned -- understand there are two factors, meltdown and specter. apple says they have already taken care of meltdown and they are working on specter, at least if you use safari. how protected are those of us who have an iphone? jeremy: if you have updated your operating system recently, you should be protected against this

attack that is called meltdown, which is an attack that primarily target some arm chips and intel chips, and is a relatively easy attack for some bad actor to pull off. it is good that these systems are being patched or in the case of apple, have already been patched and fixed in updates they send to users. this second attacked call -- attack called specter is much harder to pull off and potentially a much harder attack to fix. they say for the safari browser, they will have a fix out shortly. this will basically prevent someone from running some java code on a website that would steal information from the memory of your computer. it would basically disable the ability of javascript to do this , that is what the fix is, and apple should have it out soon. alix: isn't specter the one

where judy dench died? david: spector has been a force through all the james bond movies. alix: jeremy, why has the stock not really paid attention? it was up yesterday and it is up premarket 2/10 of 1%. why? jeremy: the issue is it is .ffecting everyone i think investors are shrugging this off and saying, if it is a problem that is hitting everyone he and they's desk everybody and they say it will be fixed, we do not have to worry. nobody has yet done an attack based on this vulnerability. it was found by computer security researchers who informed the company's, who were already working on a fix before this became public. nothing has been stolen, there is no immediate damage, and apple says it will be fixed, so why do i have to worry?

if somebody manages to pull off an attack before the safari update is out, or if it turns out that the patches or fixes being rolled out or not complete is able tosomeone use this vulnerability to steal information, i think you will see a different response from investors. at the moment, the market seems to be shrugging it off. david: terrific report. kahn reporting from london. .ad times for alan howard his macro hedge fund lost more than 5% last year, the worst performance ever. more on hedge fund winners and losers next. tune in to tom keene and jonathan ferro from 7:00 to 9:00 every morning, and then pimm fox joins tom from 9:00 to 10:00. it can be heard across the united states on sirius xm.

this is bloomberg. ♪

♪ emma: this is bloomberg daybreak, i am emma chandra. coming up in the next hour, janice henderson and bill gross on the u.s. jobs report. this is bloomberg. now to your bloomberg business flash. the leader of apples streaming music service is planning to leave in august. he will depart after getting his final payout from the $3 billion beats electronics deal. timebe -- he is a long music representative. in the u.k., car sales fell by the most since the global 5.6%sion last year, down

to 2.5 million vehicles. brexit's impact is being blamed. the swing back to gasoline ledls let to the first -- to the first increase in carbon emissions. according to a source familiar with the matter, the strategy could bring more sports content to its customers. the premier league may decide on its media partners next month. alix: we are turning to wall street beat, where we cover three things wall street is buzzing about. bad times for alan howard, his macworld fund lost -- macro fund lost 5% last year. sell 29% ofick to his stake in uber. joining us now is bloomberg's jason kelly. break talkinghole

about what specter was about. david: let's talk about hedge funds. it is not the worse -- worst. jason: it is interesting to look at the hedge fund universe, and we are seeing something of a shakeout. it felt like we had a couple of years where the rising tide was bringing this up, and now you look at this chart, it really shows the difference. betweena massive delta a 54% gain and the worst performer there, almost a 22% loss. howard is sitting there and has lost three quarters of its assets under management. investors have been fleeing. then you turn around and look at bluecrest, which is also on that list. performer,54%, a top after 50%. alix: is that just leverage?

jason: that is what is so interesting. they said, i am not going to manage as much outside money and they gave a lot of money back. part of that was because they want to take more risk and use more leverage. stepping back, you would think isn't that what investors pay you for, to take that risk? i know we talk about this all the time, it speaks to an existential banks to. david: now they have the etf's breathing down there next. .lix: and steve cohen i was interesting -- interested in what happens with uber. are we looking at, i will be off the board and doing something else? jason: that is the question nobody knows the answer to. one thing that gets missed a lot of times when we talk about uber is you have some really true blue-chip investors in this

company. you think about tbg and benchmark, softbank going in in a big way. istbank's investment allowing travis kalanick to take some of this money off the table. alphabet's venture capital fund involved there as well. stolen so many of the headlines in a way, but what this speaks to is there is still big questions around whether this will ultimately be a good investment. ,e is selling part of his stake although reportedly wanted to sell more. david: he was willing to sell 50% and they would not let him. alix: only a $48 billion valuation. david: he is hurting, you feel bad for him. jason: it is really interesting to watch this from an investment than point. david: let's talk about billionaires in politics. start with tom barrick.

he was offered repeatedly the chief of staff and said no way, no how, i will not do that. jason: because i am too rich. david: i do not want my life exposed to everybody, a rational point of view. jason: he is one of the most successful investors, one of the most risk taking investors, and an extremely proud -- close friend of the president. he was the guy at the republican national convention with no podium and a microphone. david: and reportedly the president still calls him every night. alix: his job is, what the president meant to say is -- .avid: he is a reasonable guy robert mercer went with jim but a, very successful, real supporter of breitbart and steve bannon and the right wing and president trump. now there is a separation. jason: now coming into the fold

ringing as back to silicon valley is peter thiel, who apparently may be in talks with mercer and others about a new conservative media company. david: they have reportedly been talking to roger ailes after he left fox news to hire fox news talent. jason: just before he died. alix: who would be the talent? all of those who no longer work there because of sexual harassment and steve bannon? david: it is a long list. jason: one of the things that is very much in the water as this wolff book gets sold earlier than they planned, the president has sued him and threatened his publishers. david: to slow him down. jason: absolutely. what it does seem to speak to is a real reshuffling of the sort of commentariat, but this is so interesting about the mercer's

,ome of the shift in -- mercers the shift in how the money is going. david: the one thing steve bannon wants is a podium, a public platform, and if he loses breitbart, no one is listening. alix: but if he goes to a conservative news outlet, what is the difference? jason: there is a shifting landscape where steve bannon ends up who knows? ,ho will end up working there there may be people who were working in the white house. there are rumors there will be a lot of departures for the white house. it is a fascinating time. follow the money. alix: did you buy it? david: i think i know what is in it. jason: i do not have it yet. david: fake news, it is very sweet. alix: from donald trump's point of view, now you have two conservative networks. david: coming up, gas prices

soar. one report blames the cold freeze and the storm. alix: send me an email and tell me what "spectre" was about. also, check out the bloomberg terminal. this is bloomberg. ♪

david: this is what i am watching right now and unfortunately it is what i was watching yesterday, a storm. it is a bit different because it is the cold. alix: it is four degrees below in new york. lasio said it is going to be worse. what does that due to the price of natural gas? there is a report that it has 175 up from four dollars to dollars, but if you look on the terminal it does not look like it has gone up much.

alix: in regional areas like the northeast, you will get huge spikes in natural gas, that the issue is that overall, the curve will keep being depressed because we have all of this natural gas. you drill for oil and you get natural gas. that weighs on the price and the market is continuing to price that in. in certain pockets, you will get a enormous spikes. we are importing from europe now, which makes no sense. we are importing because there is not enough. coming up, we await the job numbers. ,e will hear from alan krueger princeton university professor of economics. this is bloomberg. ♪

♪ job stay in america. another gain would mark the 87th

consecutive month of job growth, but eyes all are all on wage pressures. new year, new treasures. every single u.s. equity index sitting at a record. and attention, all apple owners. the company says all macs, iphones, ipads are affected by the chip security problem. david: welcome to bloomberg this job stay. alix: it turns out we did not finish the end -- david: i remember the beginning. not the end. stand.ere is where we s&p futures up by about seven points. we have not seen a three-day rally at the start of the year since 2012. the dollar a little stronger, heading into the jobs number. inlation numbers missed europe. yields go pretty much nowhere. commodities taking a break. david: time for an update on what is making headlines outside

the business world. emma chandra is here. emma: michael wolf says he spoke to the president about his behind the -- behind-the-scenes book on the white house. the trump -- trump tweeted that he never spoke for the book and it is full of lies. proposedistration opening more than 90% of the u.s. coast to new oil exploration. the obama administration gave up on selling atlantic drilling rights after protests. north korea agreed to the first formal talks to south korea since 2015. kim jong-un's regime will meet with the south koreans next week. has offered to send a delegation to the winter games. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i'm emma chandra. this is bloomberg.

david: thanks. we are under 30 minutes away from the nonfarm payroll numbers for december. we welcome alan krueger, economics professor at princeton . alan comes to us from philadelphia. joining us by skype is paul mcdonald, senior executive of robert half. alan, i want to start with you. 40 -- for the 40,000 foot view, what is going on for you? [laughter] because therest are a lot of economists here does not mean we know what is going on, first of all. [laughter] headed forare another strong report. the consensus is around 190,000. see any reason why we should see a slowdown in terms of job growth. i could easily see this report being in the 200,000 range. david: give us a sense about

wage increases and participation rates, to #are you focus on -- 2 numbers i know you focus on. alan: wages have been sluggish. we came waiting for a transition to 3% wage growth. we will hopefully see that soon. if not, it makes us rethink some changes that could have a significant impact on the job market. labor force dissipation is being driven by primarily demographics. we have 10,000 people a day turning 65 and retiring, i think that will be the main driver of labor force participation the next decade. unless we make a significant effort to try to bring people back to the labor force who are disabled or who have become addicted to pain medication, like opioid medication, or make a serious effort to make the work force more friendly to women, who have demands of terms

of raising families were taking care of parents, i think the primary factor on labor force participation will be the aging workforce. david: i want to talk about the age issue, but first, i want to go to paul mcdonald. how does it look from where you are? paul: for the past 17 years, we and flows ine ebbs the job market. we deal with finance, creative, legal, high administrative staffing. is fourif the number part 4% and implement last month, about half of that number is the actual unemployment in the areas we serve. we find that demand is extremely high. we find the companies really looking for people for a long period of time are getting creative. created in the way they are searching for your, more heavily weighted towards cultural fit

and soft skills. about 75% of the job description being used as a benchmark. buying 100% ofis the job description these days. so they are getting creative. alix: how is that translating to wages? paul: we are finding -- for instance, let's take the cba. with a couple of years experience. that individual is getting multiple offers. so it is driving the market higher. it has been that way the last few years. we are just seeing it now become more of an issue, where companies may say i will take someone with a year's experience, try to sit within my hiring budget, and then train up. they are investing more in the training aspect of individuals. alix: meaning they can actually get people who are mostly qualified for less.

walk me through how that will hold down the wages, even though we are at full employment. where are we in the cycle of employment? alan: i think we are pretty close to full employment. overwe have seen is growth the last 45 years, which is one of those changes in the labor market are referred to earlier. if you go back historically, when companies would hit a bottleneck and have two raise wages for a narrow occupation because of equity concerns, they would raise wages across the board. now, what companies are doing is reaching out to a temporary help form or outsourcing form -- firm -- help firm or outsourcing affecting --is not if you take us back to

2011 -- i will describe this chart -- in the earlier part of this time, the steeper increase in employment was in higher paid people. as time has gone on, the medium and lower-priced people are actually gaining more jobs. the curve is steepening. you are a labor economist. are you observing that? absolutely. the unemployment rate is typically quite low for high skilled workers, workers with a college degree or higher. it is usually a half or even less than the on employment rate for workers overall. what a tight labor market means is it is getting tighter for lower paid workers. that is one of the reasons we tend to see a rising tide when the economy reaches full employment. why we see opportunity at the bottom. there is always a reasonable amount of opportunity for workers with high level of skills.

even when the economy is not doing so well at a macroeconomic level. alix: it seems you deal with high paid workers. are they also dealing with equity, more vacation time, more flexible hours -- is that part of compensation that is not being reflect it? paul: that is part of the creativity we have seen. you go back to 2010 -- a lot of the perks and benefits were pared down to the mandatory. today, we are seeing bonuses, stock bonuses, as well as participation based on company growth and expansion. we are also seeing parking or commuting costs being covered. some of the companies that have the ability are actually giving more money towards medical and health, which is a great benefit because of the cost of those benefits to the employee. david: in a nutshell, is your job easier or harder than it was in 2008? we use technology, but we

still have the human touch in order to find those individuals. we have been doing this 70 years. we have seen a lot of changes. staying on the cutting edge of the technology front. the demand is solid. we see individuals, recruiters at the frontline level, are staying in touch with candidates on a 365 day basis. to say it is tougher, i say we have to be more creative to find the best individuals for our clients. alix: a deer asks is the increase in health care expenses affecting wage growth? -- a viewerasked- asks if the increase in health care xmas is affecting wage growth? >> over the last five years, we have actually seen a slowdown in health care cost growth. one of the surprises and one of

the reasons inflation has been more modest than it has been in the past is that health care inflation has slowed down. david: paul mcdonald of robert half, thank you for joining us. alan krueger will stay with us. more from our exclusive interview with the st. louis fed president. 2% said target is quite important and has been beneficial in keeping inflation stable. if anything, keeping it too low and to stable. i would not want to mess with that. ♪ that. ♪

♪ emma: this is "bloomberg daybreak." former uber ceo travis kalanick plans to sell about 29% of his

stake in the ride hailing service. he could get $1.4 billion from his sale to softbank in a consortium of investors. he owns about 10% of uber paid about $1.34ey fx billion in the third quarter because of the tax reform overhaul. citigroup, goldman sachs, and bank of america are all taking charges for the same reason. in the k, car sales fell 5.6% -- in the u.k., car sales fell 5.6%. demand for diesel cars plunged 17%. the swing back to gasoline models led to the first increase in carbon emissions in two decades. -- jobs numbers

in about 15 minutes now pay the federal reserve will watch the numbers for a clue of where the economy is. we spoke with james bullard. >> the 2% target has been important and beneficial in keeping inflation low and stable. if anything, too low, too stable. i would not want to mess with that. what we could do is put a process in place where, every five years, we thoroughly review the inflation target and think about why we have it and what we think it should be. the bank of canada does this. i think that is best practice right now. calendaro that in a basis, and not let it interfere with the day-to-day monetary policy decisions. michael mckee joins us now. in listening to him, he is clearly not too concerned about inflation. increasehere is a 2.5%

-- i guess the 2.5% increase in wages would not bother him. michael: no, she would like that. he would like to see it go higher. the question is when day you get inflation out of that? privatelylling me that you look at the phillips curve and it is not in. but part of it may go towards 2% fed's commitment to the price target, because people take them seriously. there is a feeling that we will not see inflation, and therefore you do not need to push of wages. david: jim bu, is he coming up with a new modelllard -- jim bullard, is a coming up with a new model? michael: basically, not much is changing, so here's the bottom dot on every plot. he does not think we are that should raise rates, because why

should we need to? he says maybe we are getting closer to a change in regime now that we are seeing growth pick up, but he is not seeing a change in the inflation projector in. -- p: -- present during reojectory. it is an important priority that inflation does not chronically undershoot hour to present objective. >> it is a trajectory of interest rates that is really of importance. there is some uncertainty about that. >> will it turn out to be 3%, time will tell. but i do think we should he removing accommodation in a gradual way. >> we are looking at three rate hikes next year, the same as the fed. >> we maintain our fairly cautious outlook for the u.s. economy. we inspect the fed to hike. it is a good trigger.

a of inflows into the u.s. >> we also expect three further hikes next year. if the tax bill leads to more capital spending, that is still to"if," because in regards corporate, we need that. the fed can be more in regard in terms of rate hikes. >> while janet yellen said ringing inflation up to 2% is important, we do not think it will quite get there in 2018, it installs -- it is also important to stabilize the labor market. they think the labor market has about improve does it really can. >> changes in tax policy will provide lift to economic activity in coming years, but the magnitude and timing of the macroeconomic effects of any tax package remain uncertain. alan krueger, princeton

university professor of economics, the wildcard -- tax reform. can it increase productivity and wages? i really enjoyed listening to that cause of commentary. it could, in the short-term, put upward pressure on the economy, even though we are close to full employment. upcould lead growth to pick in 2018. in the long run, i do not see much in this bill that will raise productivity growth. i do not think it will increase research and development. i think it will hurt infrastructure spending, because the state and local tax production, other changes. in the long run, i do not think this has much impact on productivity growth, which is why virtually all of the economic experts look at the bill and do not anticipated to have much long-term impact. david: do you get productivity

growth of what employers have no choice? they do not want that pay more until they got to. so those wage growth drive productivity? high pressureet a labor market can deliver lots of benefits. the question is for how long. if you have much pressure, you end up with levels -- bubbles. that can cause crises. but we know a high pressure labor market has an official effects for wages and productivity growth as employers seek to reduce inefficiencies, use labor more efficiently, increased training to avoid having to pay higher wages. princeton,krueger of you will be sticking with a stated we are minutes away from the monthly jobs report. euro-dollar slightly lower. can the number jumpstart the dollar in any way after a rough start to the year?

shortly after the report, bill gross will be joining us with his immediate reaction. this is bloomberg. ♪

♪ david: just under eight minutes away from the u.s. jobs report. here with what to expect, we have alan krueger, joining us from philadelphia. are you there? alan: i am here. david: let's go back to what you referred to about the opioid crisis. i have this chart about the percentage of americans who have a criminal record -- we talk about opioids quite a bit. are you familiar with this phenomenon? i have not been. alan: absolutely, this is a significant problem. it overlaps with the substance abuse problems. a lot of the reasons for

criminal records are because of substance abuse. is a true crisis in the african-american community, because they have such a higher incarceration rate and criminal records as a result. it makes it very difficult for many individuals to get a steady, high-paying job. david: the chart we just pulled 1990, it ist from approaching 35%, which struck me as an almost unbelievable number. alan: and if you look at young black men, it is over half. i think we need to re-think our criminal justice system. we have more people in prison than any other country. employers also have to think seriously about their hiring standards. and if someone made a mistake when they were young, should that preempt them from being able to work in particular jobs? alix: of the expectation is for

jobs to be at 100 90,000, employment rate hitting for power 1%, and 2.5% and average hourly earnings. specifically on the average hourly earnings, are we looking at unfavorable face of facts, because we had a really nice surge, apparently -- comparatively, month on month? alan: that is possible. the other thing i would point out is with inflation below 2%, we are seeing real wage growth. ultimately what matters to living standards is how wages grow compared to inflation compared to the cost of living. so i think the strong labor market we have seen the last year for years has in generating wage growth. that is a positive sign for our economy, even the people may not fully appreciate it, because they are accustomed to higher wage growth. alix: will that be a good sign for the dollar? brad bechtel joins us.

brad: i hope so. expectations are building around this number. seasonality could influence the number hire -- hgiher. -- higher. expectation is high. typically, we set up for we doointment, but recognize the potential of some seasonal impact. strong retail performance, perhaps. that would be a dollar positive fisher. alix: on the dollar negative, what we are looking at is ecb has more catch up potential than the fed. also, potentially you see investors more afraid of the politics thanu.s. european politics -- that seems to be the bullish euro, bearish dollar story. what do you see? brad: right. the euro started the year great.

the euro-dollar and the euro-yen -- both rising a decent amount this year. the euro-dollar is at an interesting point. this 121,000 level is key. the 1.25e head up to expectations are building. the data has been good. it is hard to fight that theme at the moment. is that possible we are underestimating the effects of the repeat eurasian change in the tax laws? repatriation change in the tax laws? brad: that is a big risk. what we are realizing is that, although true, there is a significant amount held in foreign currency. those dollar repatriation flows will be important. that will be a dollar tailwind

for sure. we have seen a moving commodities and a flat yield curve, which have put pressure on. i think we are getting a little oversold in the dollar on a broad basis. alix: the dollar bulls crossing the thing is at the end of the day. so which has the most vulnerability of the dollar ends up rally in? brad: the euro has the most vulnerability, given what we have seen in the last couple of weeks in euro-dollar. look for that. as well.dollar-cad canada could be in play. the dollar-yen had a decent move , since japanese locals came back. it has been rallying. if we get a bad number today, perhaps that takes a hit. david: alan, suppose you're going to the president -- i understand it would eat donald trump rather than barack obama

-- but what would you advise him? what would you say this is what you should focus on, mr. president? alan: donald trump highlighted highlighted labor force participation when he was running for president. i think that is what he should focus on. interestingly, there is 81.8% and primary adult participation. how much more upside you want to see in that area? alan: it has not risen for men. that is an important part of his base. that should be a hope -- focus of policy. i think we will see more coming from the administration on the will be a crisis, which is participating -- in the low

participation. that is an area where they can focus more on the future. alix: all right, we have 10 seconds. your trade in the next minute? brad: get long euro-dollar. alix: thank you. brad bechtel of jeffries, and alan krueger, former chief white house economist will stick with us. we are about 60 seconds away. here's where the markets daca. a nice rally in equities. all major u.s. indices closed at records. s&p futures up by nine points. european stocks also seeing a nice move. the best winning streak in about two months. the dax climbs higher as well. in other asset classes, on the margin, a stronger dollar story into the jobs number, but it has been difficult for the dollar over all. euro-dollar down as inflation got softer in europe. the 10 year yield pretty much goes nowhere appeared

commodities take a little bit of a break, down by 1%. still read around the three-year highs when it comes to oil. and the 190,000 private jobs estimate to be added with 4.1% what we are looking for. julie: 148,000 jobs. obviously short of that 190,000 justate that alix mentioned. 4.1% was the jobless rate, as expected. in terms of average hourly earnings, up 0.3% year-over-year. those numbersof in line with estimates. relatively anemic earnings growth. a couple other details -- we did get some revision to the prior month, october and november, that resulted in a net decline -- not a decline, but 9000 lower than the prior numbers. the participation rate steady at

62.7%. workedorked, 34.5% hours for the week. couple areas of strength within employment -- private employment at 100 46,000. the majority of the total me fracturing jobs at 25,000. that was better than estimated. health care jobs up 31,000. construction of 31,000. and to the downside, retail jobs. even seasonally adjusted, down by 20,000 for the year. the retail industry lost 60 7000 jobs after a gain of 23,000 in 2016. david: let's bring back alan krueger. is this solid? alan: it is not bad. i would not overreact to this report. i think we will transition to a path of job growth in the low 100,000 range. that is kind of inevitable,

given our demographics, labor force participation rates. i think we make that transition. i think people got overly exuberant because of the adp number. by do not think this changes the economic outlook all that much for 2018. david: and wage growth about what people expected. participation rate about sideways, the way you had said it was. any surprises there? alan: no. wageld say a 0.3% in growth -- you have to look at the rounding -- 2.5% over the last 12 months, we could still be on a path to 3%. that would be a sign of improvement. i would not overreact to this number. the numbers are noisy. we had some revisions to previous months. we will get revisions in the future. you: alan krueger, thank for the reaction. alan krueger of princeton university. mo the change in non--phar

payrolls -- retail got hit. they were down by 20,000. average hourly earnings coming in right in line. themarket, by bonds, sell dollar. now i want to go to tom keene and jon ferro. tom: we say good morning to you off of this jobs report. some of the data we see moving. as always, we equip william gross of janus capital -- we speak with william gross of janus capital. good morning. i guess it is a fully employed america? do you see a fully employed america? bill: no. as he talked about in the last 30 minutes, there are a lot of underemployed people still out there, maybe in the low-wage category. i do not think we are yet at unemployment. opposed to the u-3

is a critical number. the important thing is wages. the jobs creation, fine -- it was wages -- 0.3% with a revision back down. 0.2 per month. you can get inflation going, which is what the fed wants to get going. an: you are enough of integrity that you are member technological change. there was a day you had a munro trader at your bond desk. michael bloomberg showed up with a bloomberg terminal -- you know about technological progress. is the reason we are not seeing wage growth has a new technological progress? bill: i think, to some extent. wages are a function. they play back and forth in terms of productivity. technology plays into that.

it will be a factor to maybe five to 10 years. it refers to de-globalizaation now. and other factors that tend to wage growth. demographics, importantly, are key. we see that in japan. we have seen that for the past decade, where a declining or static labor force puts a lid on wages, and we are beginning to see that here in the united states. ferro talking to gary cohn in the 9:00 hour -- let me make this clear. if one line sticks out, it is the collapse of retail employment in america. another negative statistic today on that. jonathan: away from the detail of the jobs report.

you positioned in terms of how you expect the curve to a ball through this year? evolve through this year. model thatnk the flattens is an old model. what i see a central banks, not just the u.s., in terms of liquidating fives and tens as they move the other way on qe, but also the ecb, as they reduce their is, there will be more supply in the fives and tens than there have been the last several years. that tends to keep the curve relatively steep. the important thing is where our central banks and the fed in terms of where they stop on the policy rate. you had discussions 30 minutes ago about perhaps 1% on the real rate, which would be 3% on the fed funds rate. that is too high. 2.5% -- 2.25%.

i think you could see a 2.4 610 year. curve not the flattening as opposed to what is expected. jonathan: do you see an opportunity to shorten the belly of the curve? bill: not shorten. i do not think there is a significant tightening coming. the critical function is where our short-term rates? when we had a flat curve during prerecession and over the past 20 or 30 years, it was really the function of short-term rates as opposed to long-term rates flattening out that curve. if short-term rates do not move up about a certain real interest rate level, we do not have much to fear. want to translate what i just heard -- our camera guy looked at my belly as you're talking about the belly of the curve. that is the five to seven year period.

bill gross, let's make this clear. i believe that means yield up is what you just said, and price down. bond need to prepare for a bear market, where we see price loss i made this yield increase? bill: i think so. and a mild one. i have talked in the past about a 2.40, 2.45 low. we are about that now. in any case, the long-term secular trend -- these levels are about to be broken. what does that mean? it means the economy can support 2.75 10 year 2.50, treasury, as opposed to what it required the last couple years. should a bear market breakout, if it goes from 2.50 to 2.75, you lose all of your income. so bear market, yes, but lose a

lot of money, probably not. jonathan: last year was big for equities. junk did nothing. treadedd water -- it water. what would you do in the united states in terms of your exposure to high-yield? bill: i am not exposed to high-yield. i am short -- spreads are very narrow. they follow the stock market. one to four a correlation. if the stock market goes up 1%, then the price of the cbx goes up by a quarter of that. yields down.gh there is a certain limit. yields cannot go below 0 -- i do not think they can. as they approach lower and lower --els, the corporation

correlation disappears. i think we are overdone in terms of the low levels of high-yield. alix: that was bill gross of janus henderson. thank you. you can hear more from bill gross on bloomberg radio. it can be all -- it can be heard all across the u.s. on yours xm -- sirius xm. market andond currency market where things get interesting. the dollar now relatively flat. the dollar losing steam. the euro flipping into positive territory. you are getting a little -- bull flattening. 49 basis points the spread between 2-10. 5-30, where you see a steepening. this is bloomberg. ♪

♪ emma: this is "bloomberg daybreak." i am emma chandra. coming up, gary cohn, the white house's economic council director. this is bloomberg. ♪ now to your bloomberg business flash date citigroup village on european stocks. strategists are forecasting in 18% rally in europe this year, the continent's best performances 2009. and europe's us showing relative to the u.s. in years. amazon is making a bid to stream

english premier league matches. on premier league may decide media partners next month. the leader of apple's streaming music service is planning to leave in august. according to a person familiar to the mayor -- to the matter, -- i iovine thank you. the jobs number out 14 minutes ago. here is what we learned. the u.s. economy added 148,000 jobs. that missed estimates. that was down from november. unemployment holding steady. average hourly earnings, 2.4%. revised lower. now intor index

slightly positive territory. we are pretty much flat. ten is where it gets interesting. 49 basis points. we are looking at a bull flatten or -- flattener. seeing a lot more buying of the long end of the market. for more, ira jersey joins us from kristin -- princeton. 49 basis points. >> and it is probably going lower. it does not matter if it is bull or bear. bull, but when you look of the jobs numbers, they are within the typical one standard deviation move. you have a little surprise in that service jobs were what drove down the market. that has disconnected with what we got in the adp report earlier this week. david: for the of us -- for

those of us who do not fed speak, interpret this. are these good enough numbers that the fed will keep raising rates in the short end, but not that there is long-term growth inflation? ira: that is a pretty good analysis. when you think about the federal reserve and what they look at, 150,000 jobs a month is ok, as long as incomes are growing. ofn you look at the paycheck the whole economy, aggregate labor income, you see that is still rising on trend. the rise is even rising at the same pace it was prior to the global financial crisis. you have ok aggregate income growth. the question for the fed is are we going to get higher inflation on the back of this low unemployment number and the like? situation where, potentially, you have 10 year yields that do not do much at all. it is really with the federal reserve hiking that you get the short end of the pushing yields

higher. that is made up the yield lightning -- flattening. our forecast is for the curve to flatten 20 points by year end. alix: wow. that doesn't freak out the fed, the market can handle that? ira: the question is is that a symptom or a cause of an economic slowdown? some research we did earlier at "bloomberg intelligence" is it is a symptom of the federal reserve hiking, of that long-term growth expectations will not run out of control. really something like two-tens, when it gets to zero, you have two to four years before it gets to recession. the question is why twos-tens doing that. it is flattening because the federal reserve is hiking more than the economies to just it should be. you start within the minutes.

they are discussing this, saying are we flattening the curve too much, is this going to far -- too far? you have two camps. one, that this is natural. that this is going to fast. those camps will collide. aboutoverall, we added 2.0 6 million jobs for 2017. the lowest since 2010. you could make an argument because we are near the for employment level. talk to me about aggregate labor income. income, thete labor number of people working, how much they get paid per hour, and how many hours they work per week -- that trend is very important for things like personal consumption. when you look at the national income data, that is biggest contributor to national income. that is continuing to grow on trend. like i mentioned earlier, that trend it was prior to the 2007

financial crisis. from a fed perspective, things are growing fine when it comes to aggregate labor income, even with a slight miss on headline payrolls number. .lix: good call ira jersey. of the nine basis points. apples out saying all macs, iphones, and ipad are exposed to a chip flaw. joining us now on the phone is dan ives, gbh insights chief strategy officer. rating on apple. these are big headlines we care about the of the stock not reacting. why is that? dan: i think they have been proactive. apple is an iron fortress in terms of their operating system.

there is not much concern, because they had already put out a patch. not expecting it to really from what consumers they see in terms of a slowdown. this is not a great situation, but everyone is handling it well. apple is getting ahead of this and making sure it does not andad like a brush fire where consumers, especially in the fact that they are in their biggest product cycle in a decade with iphone x. david: what about their rivals? the people who produce smartphones. are they behind or do they not have the problem? dan: right now, if you look across the board, the jury is still out in terms of where the issues are on the chip side. others, like microsoft, are handling this well. to apple aseaks always more front and center. they need to be extra careful.

part of the alert of the apple -- allure of the apple system is ren --etrable -- unp unpenetrable from security. david: usually we hear about these things because there has been a big hack and someone has a lot of data -- as i understand, no one is aware of anyone breaking in. just no one did. is this hard? dan: very hard. it would be like getting struck by lightning twice, in terms of using this as a hack. bute has been a small hole, it has been directed fade. it is good news, bad news. the bad news is that this actually happened. but in the world of computers, it is something we have seen. the good news is it looks that

the industry has been proactive, got the patchwork from intel to apple across the board. it seems that the damage is negligible. if anything, the only thing a consumer would see our slowdowns. i do not think this is an impact to intel or apple. alix: thanks for joining us, dan ives of gbh. on the economics and markets front, the u.s. economy added 148,000 jobs in december. much less than estimated. unemployment holding steady. average hourly earnings do not go anywhere. up 2.5%. revised lower for november. in the market, a strong reaction. the dollar now flat after dropping like a stone. it is about the long-term. coming up, if you have a bloomberg turn them all -- terminal, check out tv . interact with us directly. go to tv and check it out.

this is bloomberg. ♪

♪ watchinge's what i am today -- the 2s/10s spread. -- 48. that 48 basis points. this is unreal. a big keeps going lower, it keeps inverting. what does that wind up doing to the fed? david: the question is what does it mean? does it tell us anything? if it inverts, it tells us something will happen. fake means recession, it would mean seven of the end of the day. david: but if they keep hiking and we do not get anything at down.ck end, it will slow

alix: but jim bullard does not see any sort of recession risk him about he is looking at the curve. you could argue he brought that. david: and to your point, no big rush to be hiking. he says maybe one time towards the end of the year. alix: i am watching 48 basis points. jon ferro is watching it, too. in the next our, join jon ferro -- join jon ferro. gary cohn will be joining him as well. jon made big news the last time he talked to gary cohn. alix: pressure. this is bloomberg. ♪ ♪

>> 30 minutes until the start of trading, this is the start of the open. ♪

jonathan: it is payrolls friday. a worse than expected rise of 148,000. wages come in and line. growth rich, inflation poor. it inflation pressure cools. it is a clean sweep of all time highs. the s&p 500 heads to its best we can over a year. as we count you down to the opening bell in new york city, the futures of 9 on the s&p 500. another record of the cash opening in 30 minutes. in the bond market we fade the initial post payroll reaction. a similar move in the fx market. euro-dollar at 1.2050. onare off the high we were when the payroll came through. we begin with the payroll report . th