wages are in the spotlight. a big selloff in the bond market. offers exemptions on double-digit tariffs are aluminum and steel. -- for aluminum and steel. alix steel finally back from houston. alix: that's no, i just could not get -- that snow, i just could not get out of houston. it is operation wait for the jobs number. futures totally flat. euro-dollar moderately weaker. it is a risk on feel. weaker on the day. in the bond market, you are seeing a little selling on the margin. yields up about two basis points

now. we are looking for a weekly loss. a quick take on the stories we are watching today. it is president trump's trade war and the u.s. jobs report. chief getting us is the u.s. economist for bloomberg and our reporter. dramatict, there was a announcement outside the white house by the south korean national security advisor. >> president trump appreciated the breathing and said he would oeet kim jong-un by may t achieve denuclearization. david: this is fascinating for this reason, the world is interested in this. the eu saying this is a good thing. they have really adjusted the possibility of ending conflict in the korean

peninsula. >> the fact they are moving towards talks rather than escalating tensions at the very least is a positive signal. this may not be unrelated to the other topic we are going to touch on, which is trade policy. south korea has a significant steel industry, and of course slapping tariffs on two still imports puts pressure on south korea as well. this is a good way of motivating both parties to come to the table. alix: south korean steel exports were already on the decline. it does not feel like we have a lot of risk they did. -- baked in. there should not be much of it a re-rating now. >> absolutely not. you see a short move in markets after news like this. the korean and japanese stock markets moved higher. weakened a little bit as

people moved out of the safe haven currency. as we look at where the european stock market and s&p futures are, we are not seeing that something. we are waiting on the jobs report. we are not likely to see any shift in the markets. we might see that reflected in implied volatility, but it seems like it will not be moving markets at the moment. alix: let's talk about the jobs numbers. this is the standout we will be looking at i think. the white line is average weekly hours worked, and the blue line is average weekly hourly earnings. this raises the question, are we going to see some give back in those which numbers as people return to work? >> i think that is the case. as we look at whether related

absences and curtailing hours, people whose work week was impacted by the severe weather at the start of january, that was a real factor causing a pullback in the work week and average hourly earnings. this is a common idiosyncrasy, so we're likely to get payback in the february jobs numbers today. if we don't, we will have a real h pressure jobs stories -- wage pressure jobs stories. you also put out a chart, which is really interesting. even though the blue line is going up, this is inverted showing unemployment going up radically, and that white line is employment as a percentage of the population is well below former highs. >> in each economic cycle, we have to look at what is working as a forecasting tool.

as janet yellen cautioned time unemploymentn, the rate was not a very good indicator during the last cycle of wage pressure. we have to look at a broader body of evidence. we are highlighting one of the indicators that has done a much better job which is the employment rate. yes, wage pressures are slowly building, that this is not off to the races. alix: fair point. the other story is what is happening on the trade front. here is president trump yesterday trying to negotiate it feels like with certain countries entree. to protect and build our steel and aluminum industries while showing great flexibility and cooperation towards those that are really friends of ours on a trade basis and eight military bases. basis.ilitary

alix: angela merkel saying she is concerned about the new u.s. tariffs, saying global trade must remain multilateral. i question where the risk is in the market for all of this. >> i think it has not been baked in. we were seeing the rumored wereff after tarriffs announced. you saw producers rally a bit. we saw that go away a little bit yesterday. the currencies have been getting stronger. we saw that ease off a little bit. what is curious to me is how strong the rhetoric out of europe has been so far. when you consider the rhetoric out of china has been pretty muted. they came out and said they would response strongly,

but that would be relatively mild compared to donald trump's rhetoric of targeting china on their alleged dumping. europe has been the real aggressor. david: the most important thing in this is rhetoric. even though the president came out with a big announcement, he said if you try to talk of us --- with us, we may let you off the hook. what is going on? >> he likes lots of moving parts. trade oing this with talks. astralia has been announced a possible target for exemptions, canada, and mexico as well. in terms of the tariffs we have in place so far, it is not moving the economy. the trade deficit was $30

and steel aluminum last year. basically, you are intent on chasing his nemesis. the coyote almost gets him. he doesn't look, and he has dropped off the cliff. that, we coulde be in for a deep dive. >> if we go down the slippery slope of tit-for-tat retaliations on trade, we could be headed for that. costs to raise import some degree, but the economy is on a very healthy footing as we will be reminded later this morning. we can handle a little bit of a trade wind here. david: your number is? and average hourly

earnings at just a 0.1 gain. alix: thank you very much. coming up, you know it, the u.s. jobs report. we are being joined by dana peterson, her forecast is below consensus. we will find out why. this is bloomberg. ♪

♪ >> this is "bloomberg daybreak." it has been almost a decade since lehman brothers declared bankruptcy. a federal judge has ordered the lehman estate to compensate for its role in the mortgage crisis, far less than the $.4 billion

expected. billion expected. the french drugmaker wants to unload cash. us is getting ready to liquidate its u.s. operation. a shutdown of the u.s. division has become more likely in recent days. toys "r" us has not been able to debta buyer or reach a free consolidation deal. alix: we are little more than an hour away from the u.s. jobs numbers. average hourly earnings meetnsus in focus, will we that 2.9% in january? peterson, her forecast at 200,000 jobs is under consensus.

ina: we expect a pullback retail hiring. we also think we will trend back closer to the 12 month average. see employment slow a little bit, not because there is anything wrong with the economy, but because we are more than beyond the point of full employment. alix: is the market prepared for that? dana: i'm not sure if markets are prepared for that. they are used to further declines in the unemployment rate month over month. you can still achieve that with monthly payroll gains of close to 200,000 per month. alix: that a .3% you are looking 3.3% you are

looking for is the most bullish on the street. >> i think they would say a lot of this is par for the cou rse. we have seen the unemployment rate fall to 4.1%. we are expecting a lot of fiscal stimulus over this year as well as next year. that will come from tax form as well as a bipartisan budget act of 2018. that means faster growth this year closer to 3% and 3% next year. faster inflation and lower unemployment as well. david: how focused should we be on average number of hours worked per week? that came down last month apparently because of the weather. dana: absolutely. i think we should see some sort of pick up this month.

that will have an effect on the average hourly earnings rate. i understand some people are t we arefor 0.1, bu looking for the number two round month..3 month on omb cyclone inat b early january that did depress hours that month. alix: we're talking about the fed and how they will interpret it. looking at the market, total 13, and by end of 2008. you are looking at two this y ear. how quickly and when will the market rerate? fomc certainly the march

meeting will be the tipping point. markets are thinking jerome powell might go from three to four this year. i think the fed is going to have to revise its forecast. rate goinga lower forward. we had very strong inflation readings early this year, and next year we will have the upward pressure of the fiscal stimulus. i think if the fed is raising individual dots and confirming they are looking to hike three times this year and three times next year and potentially a few more, four times, that is pushing markets to expect the fed is going to do what it is signaling. david: to what extent do you have to take into account this

new tariff situation? we talked to the fed yesterday. he said it is not that big of a deal basically. >> we have tried steel tariffs before. bush tried it, and it lasted about a year, and then they were gone. i think there is still uncertainty about how this plays out. the danger is this a foreshadow of things to come, and how much is to come? that is the bigger worry. david: how much do the tariffs factor into your assessment now in the economy, and how much should they factor into the fed's? dana: if we just look at this steel and aluminum tariffs now on inflation, it is very minor because it is not that large of a component. the bigger issue is if this metastasizes and broadens. understandws is we

as part of the nafta negotiations that president trump is looking to exempt canada and mexico, are two biggest trade partners -- our two biggest trade partners with respect to aluminum and steel. we could see this add up to something that could impact inflation and consumers and dampen trade. alix: i brought this up with our chief economist. global growth rolling over a little bit, south korean exports rolling over, german exports not holding up so great, really about domestic demand. are we in a scenario where the threat of a trade war could push the global economy from ok to not so great? dana: our expectation for the global economy is roughly 3.5% this year.

if we have broader weakness in wars or eventrade the threat, we could see some downside risk. i would caution that the first order of the year seems -- quart er of the year seems like we are always panicking a little bit. the last five years, we have had weak readings in the u.s. and other countries. in asia, you can have new year's weakertions weror distortions to the data. we tend to rebound in the second quarter, and the third and fourth quarters are pretty much fine. that is our base case. we will be watching closely the developments with respect to trade. david: thank you for joining us. that is dana peterson, an economist at citigroup research.

we will be talking about -- next. live from new york, this is bloomberg. ♪

david: in a dramatic announcement last night, south korean national security adviser announced president trump and kim jong-un have agreed to meet no later than may. >> along with president trump, we areannounced president trumpt continuing the diplomatic process to test the possibility of a he's full resolution. -- a peaceful resolution. >> a sitting u.s. president for the first time as offered to meet them, and they had given up

nothing. >> i think it would be great if they meet in mar-a-lago. i think it would be important for kim jong-un to get out of north korea, so he cannot present this as another homage to north korea. david: tom mackenzie with us. thank you for being with us. talk to us about china through all this. for a long time, we heard the only way it to get to create is through patient. it looks like washington has gone through beijing. >> the official line from china has been that they welcome these talks. i have been talking to a professor in seoul, and he said beijing is likely to be content these talks are coming about because they have long pushed for this. some experts look at the korean peninsula, and as you mentioned beijing is running the risk of being sidelined him these talks.

that ran the talks collapsed in 2009. they will want to get involved in the future to shape these negotiations if we get to that point. says fine, that works, that's fine, but if it doesn't, we don't have to be involved. this doesn't seem like a chinese way of doing things. ofi think there are a couple dimensions to this. clearly, beijing is going to be relatively content that the risks of a war on its border have been dialed back significantly by this. they could go to washington and say, not only did we sign off on the sanctions, we have actually implemented them on the ground, and there is strong economic evidence in the trading towns

and cities along the border with north korea that beijing has been incrementing these sanctions, -- implementing the sanctions, and that has got north korea to the table. of course, they are concerned not so much on the steel tariffs, but on a broader range and restrictions on chinese investments in the u.s. alix: if this was six months ago, beijing would have been seen as the moderator between the two. how did this actually happened? what was the closed room door talk? >> i think it is important to point out that relations between beijing and pyongyang took a nosedive a few years ago, and they have been heading that way

ever since china decided to take a tougher line on sanctions. the communist party is divided over north korea. there is a strong faction in the party saying they need to take a tougher line because north korea is too much of a geopolitical risk. there are policymakers in china very much focused on the domestic agenda, challenges ebt, theyining in d don't want to be distracted by potential trade tariffs from washington. that is why they ended up putting the pressure on north korea. alix: tom, we have to leave it there. thank you so much. this is bloomberg. ♪

alix: this is "bloomberg daybreak." welcome to jobs friday. we have pretty much nothing going on before jobs friday. s&p futures flat. european stocks flat.

softer.rately digesting the potential jobs report where we could see give back in average hourly earnings. the one mover has to be dollar yen, down -- excuse me, up 0.5 %. mr. kuroda coming out and being a little more dovish than was anticipated. you see haven bids off the donald trump kim jong-un story. yields up two basis points. sayings a long way of wait and see. david: that is what we will have to do. we want to get headlines outside the business world. we have first word news now. >> leaders of the u.s. and north

korea have never met before. that is about to change. president trump has agreed to an unprecedented summit meeting with kim jong-un. in the last two year, the -- year, the two have exchanged heated words. aesident trump has set off -- race for exemptions on steel and aluminum imports. canada and mexico will be exempt as long as they agree to a rewritten trade deal. u.s. allies to apply for their own exemptions. be -- oes not seem to the u.k. is set to leave the eu by march of next year whether there is an agreement or not.

the eu has said they want a deal by october. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. alix: if you want to expand into shale that is not in the u.s., you go to argentina. it is the most likely spot for the next shale revolution. you can leave your job from a major oil company and team up and other major wildcaters that is exactly what miguel matias galuccio is doing. he was instrumental in getting oil companies like chevron into argentina. stuff -- vista oil as a special-purpose acquisition company. he joined with riverstone, known

as the father of shale. miquel joins me now. miguel: thank you. alix: walking through the kind of company you want vista to be. miguel: we are with innovation in our dna. we raise $100 million in cash. we are in the process of making our first acquisition. we want to be an independent company that is focused on shale and deliver value to our shareholders. alix: i'm glad you brought up the money. how easy is it to raise money, and who are you pitching to? miguel: it is not an easy business proposition because you basically raise money with no

assets. investors, hedge funds, sovereign wealth funds. we have a big range of investors. the like the idea. they believe it is a very good value proposition. basically, they like you. when you are talking to them, what is your pitch? what are they going to get? miguel: they are going to get access to something that does not exist today in latin america. getting access to this is getting access to high growth and high-margin. we can do that. a few years back, it was a dream, today it is a reality. we need it a reality. just --we are

in terms of this, it is incredible what we can get from there. alix: how much money do you want to raise? we raise 100 million, which will give us the first platform to get going. we'll probably go back to the market sometime when we have our new opportunity, but that is going to be a second step. grow in termsll 50%roduction from 30% to per year. alix: let's talk about the shale acquisitions. you wind up getting some of the drilling rights, about 137,000 acres. you said 50,000 were in the core

area. don't you have to pay up for that, and is it worth it? miguel: we have access to a field. there are four facilities on top that are very important. we find something that is like ock here that has not been developed. we are in the right place. we have the flexibility. we have the team. we have the money. we will make it happen. alix: one of the issues i noticed is the infrastructure. you don't have the pipelines you need for takeaway capacity. the roads are literally dirt roads in the middle of a desert. how do you address these issues? miguel: this is where you are. if you are in the core of this 10% for years declining

year, we have the spare capacity for trade, then you have production. if you are in the core area, you have that advantage. huge.s. huge -- is it is different wherever you are. alix: you mentioned conventional. is your strategy going to be more unconventional or conventional? miguel: it is both. the main is conventional. you are not going to buy it. not yet. are you interested in unconventional assets? miguel: i think we are very interested. be big play is going to argentina, mexico, brazil, and columbia.

we are looking closely at mexico at the moment. alix: what are the opportunities there? they are holding their first show option. will you be a bidder? miguel: we think they have a lot of potential. we see opportunities. mexican andn central american assets. it is a country i know very well. it is a country that is dear to my heart. we will be there and investing in participating. alix: are you worried about a new government coming in and changing up the energy reforms we have seen their -- there? miguel: i am not to worry. at the end of the day, everybody is pragmatic. today, thedecline country investment, they need new production. i think the time is right. alix: looking at mexico, would

it be shale or conventional or offshore? miguel: it would be both. we would not be in the deepwater offshore play. alix: in the u.s., one of the is now part ofe riverstone and has his own company. it seems like a new generation of investment where you have an oil expert like yourself joining with rabbit equity money to guide them to the right assets. -- private equity money to guide them to the right assets. what is the truth in that? miguel: this is not a portfolio company. it is a public company from day one. that makes a big difference. that we are playing the loan cycle is very important. place.s money to put in

in mexico, the asset class does not exist at the moment. you have a very good idea. you have a good team backing it up. you have investors that trust you, and they trust riverstone in this case. what is the one thing you guys are actually worried about when it comes to oil and investing? think we will look after resources. when the resources are there, we know we will make capital. alix: there has to be something you are worried about, that keeps you up at night? miguel: always there is something we are worried about. to me it is execution. execution is what keeps me focused. we promised, and we deliver.

execution is key. there are things we cannot control, oil price, gas price, so not much to worry about. alix: thank you very much. boy, we get argentina and you talking shale all in one segment. what more can someone want? risks are rising for the high-yield credit market. that may be good news. live from new york, this is bloomberg. ♪

>> this is "bloomberg daybreak." i am in the hewlett-packard enterprise greenroom. gross,next hour, bill janus capital investment manager. your bloomberg business flash. to giveappear ready jcpenney more breathing room again. according to people familiar with the matter, the struggling retailer is selling $400 million in bond. this strategyused several times in the last year as it tries to survive. ofn resorts will pay a total $2.4 billion to settle a lawsuit. settle.een forced to

wynn was ousted last month over a sexual harassment scandal. 15tin shkreli could get years in prison or more when he is sentenced today in new york for securities fraud. investors in his hedge funds got all their money back and more. that is your business flash. alix: we now turn to wall street beat, where we cover what wall street is buzzing about. today it is all about how vulnerable the market in high-yield debt could be and the possibilities. rising interest rates will disrupt the vulnerable high-yield market, which is a great opportunity. >> we are looking forward to that. rising rates will create volatility, particularly in the high-yield bond market. we need that dislocation to find new things to invest in.

while we have existing investments that might trade down, we are very confident about the credit quality of what abilityhis companies' to pay us back at maturity. what we worry about is not what we own. it is how do we deploy the $25 billion in dry powder that we have? in order to do that, we need things to move around. >> how big of a correction is the high-yield market in for? >> we do think the high-yield bond market is horrible. it is a fixed-rate market. valuations are tight. i would argue that are pretty stretched. a typical high-yield bond today yields 6.5%. if the fed goes forward with their interest rate hikes, that will cause mid asset value in

these mutual funds to go down. that will then create technical selling. that ritual cycle will then tual cycle will then cause spreads to widen. we think the high-yield bond market is potentially wonderful as we look out over the next 12 months. we own very little fixed-rate publicly traded debt. we are much more cognizant of the relative value that indicated l -- syndicated loans offer. you get a floating rate structure that gives you a higher yield. >> spreads will go from 400 to what? >> the historical average of the high-yield bond market is about

600 over treasuries. we will get a lot more active when we see it crossed 700. >> is that good to happen in the next 12 months? >> i think it could happen over two or three years. >> if you are right and spreads and two 700, what happens to the high-yield market? does it collapse? what is the outcome? >> it is certainly not going to collapse. there is tons of dry powder out there. as spreads widen, you will see lots of investors coming into that market. there have been outflows year-to-date because of the fact that it does not look back compelling relative to other alternatives in the credit space. prices go up and down. they always do. years, high-yield

credit has crossed that 700 spread several times. we have been in a tremendous period of complacency. it will not last forever. alix: that was a great conversation. >> the reason you are asking yourselves, when is the last time i saw bennett goodman on television? alix: never. >> it almost never happens. alix: it is interesting to see how bullish he is on high-yield credit and expecting a decline, but we have never been at the zero bound. i wonder if that production will come true. >> he is bullish on the opportunity. he is not bullish on high-yield. high-yield is going to tank in the next two years. he says it has crossed 700 basis points 10 times in the last 15 years. some of that was precrisis. i put together a highly technical chart right here that

shows it has crossed 700 basis points five times since the crisis. it does not happen that often. you have a lot of try powder, not just at blackstone, but hedge funds and equity firms across wall street sell the debt salivating at this opportunity -- wall street salivating at this opportunity. david: if they go up really gradually, does this interfere with his hypothesis? powderder, -- dry somewhat lessens this. >> if the fed raises interest rates at a slower pace, that will spread out the time period in which yields will rise and prices will fall in the jump market. the more dry powder is put to work, the less sharp, the more

moderate at which yields rise because people will be coming in as they spot value. what he told me off-camera come and i don't think there is any problem sharing this, over that 15 years, he looked back and realized if we had just bought high-yield bonds when they crossed 700 basis points, never any other time and waited a couple of years, they would have generated an average annual return of at least 15%. alix: wow. >> that is not really a trading strategy you can sell to your lp because how long is that dry powder sitting? >> that is timing the bottom of the market. >> sometimes the bottom is a lot lower than that. alix: the risk, will there be pacific instances you can make that money -- pacific instances you can make that -- specific

instances you can make that money. is there a bound? >> any of the more sophisticated practitioners will remind you that an average yield is just that, average. a number of credits in high-yield depending on underlying fundamentals are trading well below 340 basis points. it is not a stock pickers market. it is a bond pickers market. david: thank you so much. great have erik schatzker with us. flip one redmay district. check out tv . watch us online. interact with us directly. this is bloomberg. ♪

david: watching a big raise next

tuesday out of pittsburgh. this is for the house of representatives. the president himself going out in this race he does bellwether of what happens in november. a big issue in this race has been opioids. conor lamb has been a district attorney. deaths fromoid -- opioid overdoses have gone up 34% in one year. 55 and older, this is a huge epidemic. governors saying this is a significant issue. this will be a significant issue in this election. alix: how do you measure the bellwether for that? beshould absolutely

republican. it went 20 points for president trump. this would be a huge turn. alix: interesting. coming up, speaking of opioids and the economy, alan krueger will be joining us to talk about opioids and employment in the u.s.. this is bloomberg. ♪ mom, dad, can we talk?

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that's a good one. seems a bit long, but okay... set a memorable wifi password with xfinity my account. one more way comcast is working to fit into your life, not the other way around. ♪ >> the big meat.

president trump, high risk and high reward. a big selloff in the bond market. trump offers exemptions on double-digit aluminum and steel. >> welcome to "bloomberg daybreak." withdavid westin, along alix steel. of great ceos talking about terrorists, how they would respond to gary cohn leaving the white house -- talking about s, how they-- tariff would respond to gary cohn to be the white house. the dollar is a little bit weaker. the yen is moving much lower after a double whammy. let's selloff sentiment.

overall, a mixed u.s. dollar heading into the numbers. inflation numbers are averaging hourly earnings. away: we are 29 minutes from our jobs report. unemployment may be dropping 24%. average hourly earnings may be coming off its high number last month. we welcome the nations foremost economist -- foremost . he is president of economics at princeton. good to have you here. the forecast is usually the best bet. everything leading up to this report is pretty solid.

i can see some upside surprises on the top line number. is nine percent wage growth last month was a little bit of a surprise. -- 2.9% wage growth last month was a little bit of a surprise. the number works, but it went down. it was a matter of arithmetic. -- of anadmitted adjustment will be have? the employment cost index that came out at the end of the year was 2.8% over the previous four quarters. it is possible the weather had some effect on hours and earnings. production workers, wage growth,

was much weaker than the overall hourly wage growth. signal there was some there, but a bot of noise. is there a risk we get 2.9% or higher on wage growth? maybe it is a risk for the bond market. for the u.s. economy, that will be a positive development. likely -- probably more likely to get wage growth or unemployment first? i said unemployment. but wage growth is up 2.9%. terms of unemployment, do you expect it to get to 4%? you wind up expecting in terms of labor force for tips -- participation? it is actually down over

the last 12 months. i have been pessimistic about the prospects for many people coming back to the labor force. once they leave, they the adjust their lives. readjust their lives. nonlabor force participation has run into the opioid crisis. but the economy is continuing to expand. expect unemployment to grow further. i would be surprised to see it to drop below 4% in this recovery. this blue lineer goes, the lower the unemployment rate. shows theline unemployment rate has gone way down. at thatally, we are not high level in terms of the percentage of the population working. think the number one

issue there is an older workforce. older workforce -- older workers after retirement age are less likely to work. you've reached the much the same conclusion, still a little bit low. in the past recovery, employments never recovered to the level it was previously. are seeing fewer women join the labor force than we have historically. economic conditions have not been strong enough the last few decades in terms of wage growth. come inside the bloomberg, the white line is the u.s. labor force participation rate. the labor force participation rate for those

25-54. that's been rising. what is the smart question i should be asking, now? alan: i have to do your job and mine. >> [laughter] it is too soon to see the effect of the trump administration's tariff decision, but they are creating uncertainty. david: let's talk about that. we have a chart. aluminum the steel and will outweigh the automobile sector? right there, the potential automobile jobs lost. economicthe likely effects of these tariffs? there is a lot of

uncertainty. we don't know how the trading partners are going to respond. they slapped tariffs on kentucky slap tariffs on kentucky bourbon, i could see why they would want to. increase, the aches -- the effects downstream would outweigh the effects on the steel industry. the oil industry shows that. i don't think a trade war is ever a good thing. i can see how you would want to emphasize more exports. where we areow, -- now, it is about higher inflation. david: are we overreacting to the rhetoric? a whole process that

goes on. they did that under george w. bush with aluminum and steel and they had to pull back. alan: we will be in a similar situation. this has created a bottom of uncertainty, -- a lot of uncertainty, but the administration wants to take the united states in a different direction, where we are not opening markets around the world. david: thank you. another big story, the unprecedented summit that would occur if president trump with kim jong-un to talk about denuclearization with south korean representatives. no missile test will occur during this time. joining us now is bloomberg's kevin cirilli in washington dc.

what do we know about the plans? kevin: good morning. last night, the south korean diplomat saying at the white house that north korea has agreed to meet with president trump as soon as may. president trump has said at the talk of denuclearization is a real that sanction will remain in place. -- is real, but the sanction will remain in place. the reason for these types of negotiations have been because of the intense sanctions in korea, led in part by nikki haley from the united nations, and treasury secretary steve mnuchin, has brought kim jong-un to the negotiation table. this is from intelligence sources, as well as sources in

the security community. regardless of political party, talk is good with north korea, provided it is done with great skepticism. and china is looking to continue with other economic negotiations with regard to trade. david: thanks so much. coming up, what is technology is doing to the jobs market. we hear from the tech industry. this is bloomberg. ♪

♪ there is a change at the top of qualcomm.

jacobs will no longer serve as the executive chairman. the company is discounting that role. the nonexecutive chairman will be jeffrey henderson. according to people familiar with the matter, a shutdown that the u.s.'s arrest division has become more likely in recent days. bizarre us has been unable to find a buyer or reach a restructuring deal. according to people familiar with the matter, the french drugmaker wants to reach catch by a molding product. as $200 such as much billion. job creation. a factor.d be it could lead to wage increases in an ever tightening market.

is a founder and ceo of a tech company that could be creating and eliminating jobs at the same time. we welcome him to bloomberg. business.ur where do you come in? the national chains when we started seven years ago were seen very quick success, the starbucks and domino's and chipotles. if you were an original restaurant, you had nowhere to turn. this is ok for customer acquisition, but given the nature of takeout, it is usually the same customers again and again. there is no way you can stand out a mine if you are a mom and pop website.

we created a system to empower restaurants so you were not at the mercy of businesses like grubhub. david: how many employees do you have? >> 160. david: have difficult it is to get the skill set for your business? >> it is kind of like real estate. not everything is equal. hired 75 people last year, of which we had 5000 people applied. we had to go out and hire outside recruiters and engineers, so it depends on what you can hire for. could we have people in cluttering -- increasingly

ordering things to be delivered, rather than going to restaurants? billions of dollars have moved in from investors. grubhub is publicly traded. is $500e of door dash million. that will pay for some of this delivery. ofot of these thousands delivery services are partly paid for by the investor. break a profit, we will see the true cost of this delivery. david: what about this potential transformation? what could that due to the job market? inter-minds me of how driverless car's are going to change the way we built homes -- of how driverless

car's are going to change the way we feel -- we built homes. more people are getting restaurant prepared meals as opposed to making their own food. it can change the nature of restaurants. i suspect a lot of people go to restaurants for the experience, not only for the food. how many people are going just to say time -- save time? i don't like spending 20 minutes while they make the sandwich when i pick it up. >> sometimes you don't need to have delivery, if the restaurant is downstairs. the restaurant i.e.. three times a week is 500 feet from us -- i.e. to act three times a week is 500 feet from us.

70% of our orders are actually for pickup or carry out. restaurants are a hospitality industry. you want to go out and interact with people. robots have not worked out. eatza had is no humans up front. behind the scenes, but you never interacted with them. this didn't last long. we think technology makes people more efficient at restaurants. it is not a good experience when you call on a friday night and you were putting people on hold and you are stressed. restaurant lines tend to be larger, because people have time to view the menu, which is

exactly the opposite of what you want on a friday night. on you did want to touch meeting engineers. -- needing engineers. chris: there is wage inflation. it is competitive with a lot of startups. big companies are also expanding into multiple cities, talking about their second headquarters, and moving into los angeles. david: is is wage inflation everywhere? brookings institution talks about the employer -- power of the employer, versus the employee. nots: the market is evolving in favor of workers, with decreasing unions and the increase in franchises.

one franchise can't hire workers away from another in the same chain, which limits mobility. workers sign agreements that make it harder for them to go out and find other employment. workers have been constrained, which has been holding down recovery. isid: one of my concerns 1099s, workers in the restaurant industry, a loophole that should be fixed as minimum wage goes up in the market. i tend to think it is good for restaurants. restaurantss that ,et around this by sourcing out there was the study out last week that showed the average wage for a lyft driver is three dollars, when you include all the costs of the gas and

everything that goes into it. i hope this gets fixed. there is some kind of loophole that needs to be addressed. thank you for, being here. alan will be staying with us. the dollar is gaining ahead of those job numbers. currency, next. this is bloomberg. ♪

>> we are a few minutes away from the january jobs report. by a former white house chief economist. on the one hand, the dollar is stronger. what is the positioning? >> the dollar-yen has been in play. this is on the back of the north korea news.

dollar has been holding in range for about two weeks. had a nice break lower earlier in the week. it rebounded quite sharply. and an eye on the euro-yen euro-dollar. alix: those are really idiosyncratic factors. you had to the boj announcement and the potential meeting with kim and president trump that took the shine off the yen. what the levels you are looking for? 107 is where we see. we might be around there for a little while. we want to wait on a good number in the united states. the downside 105 is what to

watch. alix: is there a risk to the dollar on these numbers? are we going to stay range-bound? brad: range-bound. we got a lot of information. the data cooperates. information will change as people we price interest rate -- reprice interest rate expectations. the market is a done deal. wages are important. it is a bit of a mixed bag in the dollar. alix: where are we in financial markets? we will see whether equity markets remain as strong as we are. that to me is a puzzle.

apart from the north korean situation, what about -- whatrorist situation about this tariffs situation? canada and mexico have exemptions. china is going to be key. a lot of currencies while he off of china. of china.y off there is volatility in the cnh and cny. the yuan dollar, malaysia, even. it is a good question where the trade stuff will points next. that will likely be china. how do we make sure

people are not as dire in their predictions? people are, or in the market sometimes than the headlines. dramatic.nes can be is a lot of potential damage that can be done in the immediate short term. the president has styled back a little bit on his rhetoric -- dialed back a little bit on his rhetoric. mixed.lar is kind of are weakging markets and some emerging markets are strengthening. it is a bit of a traders market. you mentioned range-bound and more potential upside for the dollar-jan. what about euro-dollar? the news at the ecb yesterday seem to be hawkish.

brad: there was a little bit of a shift down the road for some of the excitement we had around interest rates. that leads to 120, 125 in the euro, the range to watch. i don't see things pushing through until around summertime. david: a lot of things are going to exchange. at the job market, take the united states, versus europe, versus japan. alan: i think the dollar should be getting stronger, if you look at how our economy is doing. there is a lot of concern about future inflation in the united states.

wondering why the dollar is so strong against the euro. that has to do with our economy. alix: and yields are not being able to keep up. -- a quick check on the markets ahead of the jobs numbers. european stocks are still flat. the dow is still up by 4/10 of 1%. -- down by 4/10 of 1%. kuroda, a but more dovish with the boj announcement. and at the north korean announcement regarding president trump and kim jong-un's historic meeting. yields are moving higher.

the 10 year yield is trading at 2.87%. the spread is modestly flatter. trading on its own up by 6/10 of 1%. 200-5000 jobs is what we are for with the jobs report. -- 2500 jobs as what we are looking for. unemployment: stays at 4.1%. wages rise. the year-over-year number at 2.6%. a significant number for january. we stopped again would be 2.9%. the guys on the production line got a bit more of a race. -- more of a raise. rose back up to 34.5%.

the biggest jump in the labor 800-6000ce 1983, people into the labor force -- 8,600 people into the labor force. the u6 stays at 8.2%. atufacturing jobs held 31,000. retail jobs up only 15,000. an adjusted number, because there were fewer people higher this year. there were 300 additional coal jobs. the message from the labor department to the bond market, nevermind. >> [laughter] a big selloff -- a jump in

the dollar. now.y market up a session alan krueger of princeton is still with us. came back to the labor force last month. that is a positive sign for the economy. we will see how long that continues. this is one report. in the context of the way the u.s. economy is going, it probably shouldn't get too much weight in the bigger picture. payrolls.000, unemployment rate is staying at 4.1%. the average hourly earnings are coming in at 2.6%, year on year. a bit of a disappointment.

markets are reacting. futures at the highs of the session. the dollar is jumping. andre joined by tom oss aslong with bill gr yields move lower. bill, this is a jobs report that the president will love. you will take a massive victory lap, as the president would, on 300,000 plus jobs, with revision. how would you temper the presidential enthusiasm of this terrific employment report? would temper it with the fact that we haven't increased the focus of the trump administration in relation to lower taxes and increased wages for the working woman and man.

there has been a trend in the last few years for wages to move percent% to two point -- 2.6%, lower than last month. 2.6% will not get it done. that is probably the case. the tremendous jobs report will be tempered by wages. mario draghi is one is central banker waiting on inflation. assuming all, central banks, whether they want to look at expectations or are going to wait until they see the white eyes of inflation? ecbhe policy rate for the is the most dovish, relative to

the bank of japan. they don't seem to ever want to move it or talk about moving. 20 the end of the year, quantitative easing -- toward the end of the year, quantitative easing will come off. central bankers are cautious because they are fighting a strange battle. instead of fighting inflation, the old mantra of central theyrs 10 or 20 years ago, are fighting potential deflation. they want to see a 2% inflation before they see significant action. currency is playing an important part of that. the euro is strengthening, higher inflation in euro-land. be to difficult will it

get 10 year yields anywhere near to 3%? i think we will get there. 3%, plus or minus. 2.87%.now at rest, fore will be a 6-9 months. i think instead of three or four, we're looking at 2-3. at the end of the day, we are nds somewherefed fu around 2% as opposed to 3%, which is what the market expects. the 10-year is probably for 2%,y positioned

not good for 2.5%. >> the output numbers in the jobs report are solid. being built in equities is being disrupted. the last time we spoke to you, you have talked about that short position you had on high-yield and junk debt. do you still have that position? spreads are less narrow. the position has worked out. because of the large increase in corporate debt, in terms of high-yield debt, margins have the potential to be impacted for lower quality companies than high-yield bonds. i don't think the spread is going to narrow.

you are giving the other side 3.5% in terms of a spread. this is nothing significant. the rest-asset market should benefit. there are negatives for the economy on the other side. to bille're listening gross. central banks, including the fed, are placing -- facing deflation risk. this is a risk-on that sort of environment. risk-on sort of environment. i want to talk about deflation versus inflation, with the wage issue. people were react to these numbers -- will react to these

numbers. workede number of hours indicate anything with inflation? >> you can't make too much of it. global number is average for the last couple of months. january was affected by a snowstorm. february saw damage due to the weather. if you look through all of that, job growth was strong. it is a very good sign people came back to the labor force. on the wage front, we are lagging behind. saying, jobs were will have to taper off. now we are at 313,000. is going on with wage growth?

what are we not understanding? >> i would expected to be at 3.5%. than it has been in the previous decades. back to the practices we were talking about earlier. competition is reduced because workers are signing non-compete agreements. the job market equivalent of monopoly power is being increased. let's talk about where we saw the weakness. there are big decelerations in of sawcare, part acceleration in january. leadership hospitality was a source of weakness. professionalludes

and business services, including high wage paying jobs and low-wage temp jobs. this seems like this is across the board. hospitals have been found to be wage fixing salaries of nurses. we are seeing consolidation in the health care sector, which increases employer power. in -- maybe it means a lower unemployment rate will settle that dynamic. should we be rooting for slow wage growth? you want people to make more money so they can spend more. hold down we inflation and growth the economy? you grow the economy,

workers are not sharing in the growth. that is a problem with our economy and central banking. i would like to see it be fixed. recovery can be more self-sustaining. we are seeing consumption strong. but we don't want people to have to borrow to consume more. alix: the february job numbers, here. 313,000, the most jobs added since 2016. but you wind up having unemployment rate staying at 4.1%. year onhourly earnings year coming out at 2.6%. disappointing. january was lower as well. the labor force participation rate. the markets are reacting. scenario goldilocks

for the markets. is seeing a nice rally in the futures market. marketlar and the bond both seem confused. the dollar is up by 1/10 of 1%. there was a bigger selloff in the bond market, now we are up by three basis points. curve, a little bit steeper. it feels like the bond and currency markets are a little confused about how to take this. we will be following that reaction for you as the goldilocks scenario plays out. stronger jobs, weaker wages. -- wel be joined more will continue our discussion on jobs. this is bloomberg. ♪

♪ >> this is "bloomberg daybreak." next hour,n the blackrock global cio on fixed income. alix: goldilocks when it comes to the job numbers. stronger job growth, weaker wage growth. is our bloomberg editor correspondent -- economics correspondent. what else stood out? is onet up front, this month. but, the administration has argued you can stimulate the

economy further without touching off inflation. take a look at wages. they did not rise as much as they didin january and not rise as much in january as we thought. 2.6% year-over-year increase in the month of february. we saw a lot of people coming back into the labor force, the biggest number since 1983. 6,000 people. if that could continue for a while, the administration could have its cake and eat it. moves do not have to be looked for it immediately. least a positive political spin to the story for the white house.

the president is creating more jobs than any president in history. we now talk to the former fed governor, now an economics professor. randy, i want to turn to you. what do you make of these numbers? randy: great fundamentals. this is a very large amount of but it is notor, causing a gigantic increase in wages. having strong underlying growth, but not a strong growth of inflation. david: you would normally expect more wage pressure. randy: there is a lot of uncertainty about the relationship between underlying growth and to the labor process and inflation.

we have been seeing a break down a longer time. has been global growth. that is where we need to see higher growth. then you can have higher growth in wages and more economic growth without inflation. alix: what is the current seeing? -- curve seeing? >> a weaker number what have been great for credit. -- would have been great for credit. we are seeing more selling in the long end. will this push rate hikes? a more, later, less, now a scenario? i think the curve flattening

will continue, but fixed income markets are trying to find footing. david: can you have growth without inflation? the white house says yes. but can you get inflation without higher wages? >> you would like to see productivity rise before wages do, because you're paying for it with additional output. the question about the tax cuts is what in them would drive additional productivity. are they throwing money at companies who could invest? yet what is going to drive productivity in the future. if there was a big game from capital,l deepening of that will affect the economy. get the wage increase

before productivity when the tax cuts work? that is the question. david: the white house will say, we're not throwing money, we are putting up the money for capital investment. it takes a while since the beginning of the new tax reforms to have businesses create new capital plans. seeing a lot of regulatory change. not as much in terms of changes in the walls themselves -- rules . it's more the enforcement of the existing ones. alix: the adequate weekly more thanowth, rose 5% in three years.

there were concerns about consumer spending in 2018. do we think consumer spending will pullback based on these wages? >> consumer spending has been strong throughout this entire recovery. savemers are deciding to rather than spend -- if consumers are saving less, they are optimistic about the future and their job prospects. the unemployment rate has come , and it is not unreasonable to have the expectation. eventually, the numbers will catch up. alix: thank you, michael mckee krosner. for equities, a goldilocks scenario. stoesearch guys say to buy cks.

a more complex story when it comes to the treasury markets, a steeper curve and selloff in the bond market. scenario goldilocks for the treasury market. the dollar-yen is up by 6/10 of 1%. mixed dollar story in the markets. this is bloomberg. ♪

>> i am watching equities because of the goldilocks scenario. but i want to take a look at all of the peaks and trougs we have seen -- troughs we have seen over 100 years. highs.e red, the more

in the 30's, and the 50's, 20% off the peak. now, only 5%. this is an illustration of where we have common, particularly -- where we have come, particularly because we're looking at the nine-year anniversary of the trough. go, 2014, has been letting it rip. exxon back in the day was 3.9% of the s&p 500. global ciolackrock of fixed income reacts to jobs. this is bloomberg. ♪ >> 30 minutes until the start of

trading. this is the countdown until the open. ♪

jonathan: payrolls delivering a big upside. the wage spike short-lived. on steelump's tariffs and aluminum. and a historic breakthrough with north korea. 30 minutes away from the opening bell. an incredibly positive jobs report. softer.lar, down a 10th of 1%. basis points, despite a big downside on wage growth. let's look at the payroll report. in february.