going to win it because we have all the cards. david: whether it's a card game or a war, president trump may the first move on trade overnight and china responded immediately. we now know how it began. the question is when will it end? the federal reserve keeps to his path of gradual rate hikes, but watch for president trump's posture and what to do to the economy. sticking to fundamentals. the american job machine keeps going to matter what the rhetoric or policy. we will learn how strong it is and whether there is any signs of overheating. welcome to "bloomberg daybreak." on jobsfriday, july 6 day. i'm joined i've julia chatterley -- i'm joined by julia chatterley. julia: highly anticipated and the market reaction tells you everything. let us show you what's going on as far as european markets are concerned. we pared earlier games overall

in the session, but that is a defensive deal with health care and staples as the upper former. it's a shortened week as well. we lost ground on the s&p futures as well. we are only talking four points at this stage. it was a similar story with a defensive deal even though we rallied into the close yesterday as we had i believe 10 of the 11 s&p sectors finishing higher. energy was the underperforming and we're back about $72 a barrel for crude. down almost 1% or giving back its gains. the biggest slump in a month down 1.4%. it did hit the three-year high once again earlier this week so perspective is everything. equities may be highly anticipated. commodities continue to have a bit of a shocker and lightning rod for concerns about economic growth in the face of these tariffs. copper heading for its biggest weekly loss since 2015.

the metal has lost 14% in the last month. david: dr. copper has caught a cold. time now for the morning brief. we will get u.s. payroll numbers for the month of june. this is jobs day. with robust job growth expected to continue. president trump on monday will announce his pick to replace anthony kennedy. angela merkel, will meet with the chinese premier on the subject of trade. next wednesday the president is going to brussels for a trade meeting. before all that, we have a big weekend of sports with the quarterfinals of the world cup in russia, wimbledon in england, and the tour de france starting up. i suspect i will be watching wimbledon and you will be watching sweden. time now for the bloomberg first take. we're joined now by carl riccadonna.

the first story is trade this morning. let's listen to the president explaining why he's doing what he's doing. >> they have been killing us. billion in trade deficits last year. $507 billion. who the hell can lose -- and then you want to do something about it if you get attacked. david: the markets have not reacted much at all. let's look at a couple stocks we thought we would be reacting. one is boeing and another is harley davidson. they are not changed all that much. soybeans -- we thought would really plummet, but they are actually up a little bit. we want to welcome carl riccadonna and luke. luke: markets are efficient. that's the story here. the thing i've been looking at to try to gauge how much trade ison a day and day out basis

looking at the relative performance of industrials, banks, and russell versus the rest of the world. on the first two fronts, though sectors have remained study for the last week. among the most explosive globalization of trade has not gotten worse, but the russell has made a renewed charge against global stocks and pushing to all-time highs. i wonder if this is the case. we heard the rhetoric around trade for a while before it took the markets to price in. now will take it a while as things are enacted. julia: we got the u.s. response finally at midnight. midnight and one minute, we got the chinese response. promises from president trump, how does the u.s. administration react? it's the announcement effect that matters and not the ink ceiling on the deal, which leads us to the next deal coming

down the pipe, which could be something like $200 billion of chinese product. that likely will not be able to be put into place until much later this year because there is comment openublic on the. that. there's other forms of escalation where we talked about investment restrictions and whatnot. what we can see through this whole process, the art of the deal playing out. you put out something grandiose, dial it back halfway, and when it comes into effect, very little consequence for currency in the markets for specific products. julia: what about the real economic impact? we did in the last 24 hours have the fed minutes as well and they acknowledged the risk. "most participants noted that uncertainty and risk associated with trade policy have intensified. risk couldns that

eventually have negative effects on business sentiment and investment spending." that is the crux here even if they raise rates. carl: that sentence was the concern of what would be coming. the next sentence of the minutes goes on to say that business contacts actually are reporting some hesitation in hiring investment decisions. the fed is wringing their hands over how to actually bake this into their forecast. the real focus here between the fed minutes and also upcoming data is going to watch for this to show up in the reported data. seeing lots of evidence in the survey data like comments from the isn and consumer sentiment etc.. we are not seeing it in the hard data just yet, but it 30 a.m. could be a whole different thing. the market has really reacted because the 210 spread has become even ther narrower. the market says we can keep

raising on the short end, but we are not happy about the long end. luke: the other thing that jumped out to me is the disconnect as carl highlighted. we talked about the yield curve and the next sentence is we thought there were a lot of things besides the rise and short rates that could be contributing to yield curve flattening. look at 210. it has been a bear flatter. they seem to be of dissolving themselves of some responsibility for this when they seem committed to hiking despite the trade war fears. that has not been a bull steepener as some had hoped. end, there's a chance the balance sheet unwind may have to stop sooner than later. julia: give them a break. [laughter] i think that could be what pushes them off the purchase of a december rate hike despite a strong economy and somewhat from inflation. david: in the meantime, our third story might affect them as well and that is jobs.

we're getting that in an hour and 23 minutes from now. there is consensus that jobs are holding steady at 320%. . 3.8% you have a different view on one of these numbers -- that top number. carl: we are looking at 220,000 on the nonfarm payrolls. we talked about the gdp being so strong and this is not a reflection of this affect between a weak q1 and a strong q2. this is a strong reflection of an underlying acceleration in the economy. it's a year-over-year change that is poised to hit the fastest pace of this economic cycle in 2018 in an environment with still quiescent labor costs. if workers are not becoming more expensive and the economy is accelerating, hiring should accelerate as well.

julia: we can find the loss of animal spirits. that is what jay powell talked about as a result of the risks. is this the last plane one where we don't necessarily see the impact of the trade concerns and perhaps hiring decisions at this point? when you talk about 220, based on averages, pretty great. carl: 220 would be a very solid outcome. we have to watch for these trade war downdraft and anxieties in the data. i do not think we see it today obviously based on our forecast. i'm not convinced we will see a material impact going forward either because $34 billion of tariffs is not really that significant in a $17 trillion economy growing at a 3% pace. it barely moves the needle here. if we are watching for the trade blowback in the data, watch two things. number 1 -- the payroll change.

if you see a downside to payroll, that could be evidence. even more nuanced would be the employment decision index which tells us about the rest of job creation. f we see the diffusion inde start to roll over, that would be the earliest canary in the coal mine that tariffs are having an impact. david: you've got your own 50 chart here. it's not the diffusion index. what i'm seeing in terms of labor tightening is that we are kind of burning the candle from both ends. that white line is flows from not and labor force and that's the moving average. on the longer term trend line, it's starting to turn down a little bit. at the same time, we are getting flows from employees to numb the labor force, which is another term for retirement. the probability of an adequate retirement relative to five years ago is at its highest

level since 2001. how is kind of a recipe for you get wages up and this is a recipe for why janet yellen -- it was easier for her to say i'm going to run the economy hot and let labor input recover. it might be tougher for jay powell to do that. david: thank you both very much for being here. you can find all the charts we just used and more by running gt tv on your terminal. coming up, more on the latest development's in the u.s.-china trade war with the u.s.-china business council vice president. live from new york, this is bloomberg. ♪

david: the united states went ahead with its tariffs on imports from china as promised and that was at midnight washington time. china responded immediately with similar tariffs of its own on u.s. goods. the chinese ago premier spoke in sofia, bulgaria, saying, "china will never start a trade war but will take measures in response to others." we welcome now our colleague from beijing, m emma o'brien. was this essentially priced and from the chinese point of view that they knew this was coming? see from the market reaction that even beyond china that this was pretty much priced in. we know that this was likely to happen for at least the last couple weeks. there has not been sign of each side racing out for talks for at least two weeks.

people were expecting this to happen. they were sort of resigned to it and we have seen a lot of losses and the local stock market here. very much priced in. in terms of the reaction here, china is ray much trying to keep -- very much trying to keep the moral high ground that it sees itself having here. it pains itself is the victim in war, a victim of trumps that he is initiating. that is the line that they will keep pushing as this continues to track on. david: thank you so much for staying up so late for us. that is emma o'brien reporting from china. julia: joining us from washington is erin ennis. here in new york, we have a high frequency economics chief u.s. economist. i will start with you. situations and problems in the trading relationships between united

states and china, but ultimately tariffs aren't the right way to approach this. what is the risk now that the unites states comes back with further measures? erin: the in ministration been very clear that that is the intent. they said two or three weeks ago that they plan to move forward with the tariffs if china retaliated the first time on $34 billion. they would release for comment another $200 billion of chinese goods that would face a tariff. we go through this all again in september when the $16 billion of u.s. tariffs on chinese imports come in. we will see another $200 billion potentially. julia: how does china respond? do they keep this proportional and equate the same level of tariffs? at some point, it's very difficult race, trading relationship and the volume of trading that gets done. difficult to do this on a terror basis if the u.s. indeed moves forward with $200 billion worth of goods targeted. we only exported $437 billion

worth of goods in 2017. even if we increased to $150 billion, to get to $250 billion of u.s. goods that could face a inget of tariffs china, you have to think of other ways of retaliated. david: everyone says $34 billion is not that much considering the size of the economies. if this does escalate, how could it affect u.s. growth? completely open-ended in terms of what it does for confidence and the impact of financial markets and how that feeds back on the economy. so far, markets are largely shrugging it off. i'm convinced the equity market would be a lot higher today if it had not been for this trait threat we had been facing the last few months. the s&p 500 is still up a little on the year. for the most part, people are stimulus will not escalate into a big deal. that remains to be seen.

david: there's also longer-term decisions being put off by businesses. the fed referred to this and in minutes. plansistricts indicate for capital spending have been scaled back or postponed as a result over uncertainty over trade policy. there a longer-term effect that could kick in at some point. jim: the fed chair has talked about this as well in the last press briefing. surveys at the imf for june and there's lots of comments in their worried about trade. you look at headline numbers is on employmentd going up and down, etc. and they were booming levels. there is a bit of a contrast here. certainly people are worried. there's a lot of angst here. there is not evidence that there has been a big impact. to some extent, the lack of impact so far in the numbers as well as the still high equity markets are in some ways

unfortunately encouraging the administration to hang tough year. julia: we look at the respective stock markets for two different countries and for whatever reason, china's market has been under considerable pressure particular relative to the united states . what are chinese companies saying to the administration that we need to have dialogue here instead of tit-for-tat tariffs being applied? erin: i don't think there are companies on either side of the pacific that think tariffs are the right way to go. we have been encouraging the u.s. government and the chinese government to sit down and talk through these issues. tariffs will not get you any place on intellectual property rights and technology transfer issues. we understand that chinese governments have -- businesses have been doing the same of their government. no one has taken our advice and hopefully they will do so soon. david: you know washington so well. is anything going to happen before the midterm elections at this point? erin: i think we will see a lot of tariffs between now and then.

david: i mean real serious negotiation. erin: these things will start to take a bite out of business. in terms of a lag companies response at this point because there has been uncertainty over whether the administration was genuinely going to move forward. we are now there. this will now start having an effect on companies prices, on what they pay for the goods and what they take in making the own goods and services, and what they will have to pass on to consumers. i don't think this should wait until november until we figure out who controls congress. that is not the issue. the issue should be focused on the fact that china has issues with intellectual property rights protection and technology transfer policies. we want to make progress on those issues and we shouldn't be delaying. julia: what are they saying to you now that we are starting to see tariffs actually hit? what are they going to do as suppressing hiring or reducing expenditure? in a every company will be

little different situation because it will depend on what their exposure is to china as well as what their supply chains look like. we heard from a lot of companies that are thinking that they might shift around where production happens to try to ensure they could still have a low price. we have some companies that feel that is such a capital expenditure to figure out how to change their supply chain. they might try to write it out for a while. we have a big uncertainty for any company in the services sector. escalate continue to beyond tariffs, companies and sectors that have nothing to do with a tariff are going to start wondering whether delays or actions happening in the china market are related to the ongoing trade tensions. julia: great to get your insights. erin annas, thank you so much. jim o'sullivan is staying with us. u.k. prime minster theresa may's make or break brexit moment.

that's coming up. this is bloomberg. ♪

julia: it's a make or break moment for u.k. prime minister theresa may, who faces a key cabinet meeting that could determine the uk's future ties to the european union. joining us now is emma ross thomas. great to have you with us. everything i read about this, it seems pretty desperate and fruitless. find to pullcan off her own factions together will not be agreed by the eu. is there a solution here? emma: we have had showdowns before, but this one with for months to go until the divorce deal is meant to be signed, this does feel like the crunch moment. it is true that the eu so far has rejected most of what the u.k. has proposed. even if she does -- even with

the eu criticism, if she gets it to her cabinet, it is something of a success. what theresa may's strategy has been so far as to slowly bring her cabinet colleagues along with her as she slowly rubs out some of those red lines and moves toward a softer brexit. what's at stake is how close the u.k. will stick to the eu after brexit. what that means is that if it sticks ray closely comment will not be able to do trade deals with the u.s. and other countries around the world. that is one of the key aims for the brexiteers. visions of the u.s. striking in a on its own and having deals with the u.s. and china. they may insist on keeping the u.k. closely tied to the eu. they think this will be at risk and that is what this fight is all about. it will be into late night and early tomorrow morning. messageending out the that she is prepared to fight and that we should not expecting

-- the expecting copper prices. -- be expecting compromises. julia: how stable is she now? she has made progress. how stable is see as the leader and does anyone else want the job? emma: that's a very good question -- does anyone want the job? this is the theme that has always persisted that both sides of this debate fear that whoever won the leadership challenge would take them in a worst direction of brexit and that is what is helping keep theresa may and power. julia: thank you so much for that. the u.s. is expected to add 195,000 jobs in june. we will dig into the numbers. this is bloomberg. ♪

julia: this is "bloomberg daybreak." i am julia chatterley. alix steel is off today. let's look at european markets on a day where we got the position of the tariffs in the

u.s. on china. response from the chinese after midnight. the stoxx 600 lower by .1%. utilitiese, staples, outperforming. we have dipped slightly for the s&p futures and the dow as we had closer to the. for the dow jones, .4%. yen thear and the beneficiaries if we see greater tension and for the response from the united states. is the level. we have the minutes from the federal reserve yesterday and payroll. we are watching the ritz market market, just over 28 basis points, narrowing. david: in one direction.

let's go to emma chandra for first word news. emma: china is accusing the u.s. of losing the largest trade were in economic history. it is striking back. president trump again and posing sanctions on $34 billion worth of chinese products just after midnight. china responded by imposing levies on american products. the u.s. president said the move could lead the u.s. to hit china with even more terrorists. -- more tariffs. vladimir putin wants to give donald something to boast about when the two meet. they are negotiating to strike some deals. at the top of the list is iran's role in syria. and british prime minister theresa may has organized the brexit showdown with a cabinet. they are due to finalize the blueprint for its relationship with the eu after leaving the block. regulationse trade

to be close to those of the european union, but seven pro brexit ministers want her to terra the plans. global news 24 hours a day on air and on tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. i am emma chandra. this is bloomberg. david: thanks so much. we are about one hour now from the u.s. jobs report, and economists expect 195,000 jobs added in june. the unemployment rate probably stated 3.8%. still with us is jim o'sullivan of high frequency economics, ranked the most accurate nonfarm payrolls forecaster on the street. do not lose your record here, jim. also joining us is vince cinderellaji. explain why you think

it will be 200-5000. >> that has been the trend. of coarse, there is a lot of volatility for months to month. could be higher, could be lower. i do not see anything in the related numbers, look jobless claims, to suggest the trend has changed. despite the worries about tariffs, the message is it remains strong. david: i have a chart here checking on the planet rates. really low -- tracking unemployment rates. really low. how long can this go? >> it is limited. i expect that number to slow over time, but it probably needs to slow a lot to stop the downtrend in the unemployment rate. aen at the high 100's to 150 month, the unemployment rate will fall. it will have to get to listen 100,000 a month probably.

unemployment will continue to fall, bottom line. julia: what about wages? up in seeing a pick wages, let's be clear, but at what point does that really bite, particularly talking about small businesses finding workers and rates rising? all the conditions are there for high wages. >> i think it is happening. i think the nature of the u.s. labor market is very unionization. it has to be one worker at a time. and a lot of it is about turnover, people moving from one job to another. you look at the numbers, and the comprehensive employment cost index, the wage component is 2.9% year over year in the first quarter. today we will get the average hourly earnings number. i think 2.8% year over year.

are they huge changes? no, but we are getting sustained upper pressure. david: it occurs to me that every time we have a jobs day, if it is a good number, the markets go down. i guess they're worried about the fed. >> you see the upward number, $250,000 or we may beat at 195,000. they might pen in a fourth height for 2018. they tend to be sporadic moves. the market comes back to itself. jobs -- youbout said this is a big risk your ultimately. we heard earlier that there has been a lag in people responding and knowing how to respond depending on how their business is going to be hit. is there risk care until we see theter market reaction that

president doesn't have all's for thought? >> to some extent, we're playing with fire. arele and the markets generally assuming, and i am guilty of this as well in my own forecasts, which stays ready positive, that it will not escalate. but ultimately, there will be escalations and stress over the next several months. but at the same time, the more the markets stay high because you are assuming there is going to be a be nine outcome, -- a benign outcome, it is discouraging something from happening. ultimately, people are assuming this will not escalate into a major trade war. but we're getting more and more angst here.you look at the ism service this week very strongdata is and you are getting comments about worries about trade. david: is there a certain push-pull here?

we are getting more jobs, but they are not paying as well. people do not have as much money in their pockets. the rate of growth of the wages are trailing off. is that a limiter? this is aggressors countries, and the u.s. is slowing down the wage growth rate. i think besides the average hourly earnings this week, next week we see real earnings, which are adjusted for inflation. that is key for the u.s. consumer. are notace of wages keeping with the pace of inflation and you feel a pinch in your pocket of lower income, that is where you would expect that the u.s. worker would go back to their employers and say we need a raise to keep pace with the economy and keep up the spending. if that does not happen, you get about, and talking you could see economic retraction.

is ad to the chart, that real wage number, not a nominal number. oil prices have jumped. globally, oil price numbers are up. i would argue that the relationship between tightness in the labor market and wage numbers in the short run has been more the nominal members. in the long haul, it is real what matters in terms of productivity growth we are sick. growth. we're seeing upward pressure, and it is a function of the headline inflation numbers jumping because of oil. think both core inflation and the wage numbers are drifting up. julia: we have a chart to show the labor market overheating. job openings now exceeded the number of unemployed people. people are looking for workers, and we know there is a mismatch in terms of skills, too. with the point of where we're at in the cycle and people are reluctant to raise

ites at this point because is at the back end of the business cycle, tough. >> you hear about the so-called flat phillips curve. i think most people agree that it is flatter, rather than necessarily flat, which means for any given tightness in the labor market, maybe you are getting less upward pressure on wages per year and inflation per year than in the past. inflation expectations are quite anchored. to some extent, this is testimony to the fed's credibility. just because you have a flatter phillips curve and less upward pressure on wages does not mean there is not any. it does not mean it does not add up to something significant. if we can get those numbers going down, we get more pressure on wages. julia: this conversation will

continue every month. and thenm o'sullivan cinderella, thank you very much. coming up, a company going public, but rain market participants are not optimistic. we will talk about that in the wall street beat. this morningradio from 7:00 for 10:00. can berg surveillance heard in new york and on site rios xm radio. live from new york, this is bloomberg. ♪

emma: this is "bloomberg daybreak." i am emma chandra. paychex ceo.e

this is bloomberg. street beat, covering three things that wall street is buzzing about. deutsche bank is a 40% share decline is your may trigger interest on investors. and aramco ipo powers down. reports from saudi arabia may cast and that of doubt that the oil giant will ever go public. and ahead of a public trading debut monday, shares disappointing in the gray market. julia: joining us now is jason kelly, executive editor for global television. cheap orhink, is it still expensive? jason: cheaper than it was. that is undeniable. the question is going to be, is it cheap enough, and is there enough there that either an investor or, david, to your

point, another banks whoops in to -- bank sweeps in to prop it up a little bit? some than that jumped out to me was maybe it is like a little brexit playyo -- for a big u.s. or big chinese bank as business shifts out of the u.k.? david: there are conflicting reports about whether jpmorgan is interested. it seems like it is kind of in play. with all these reports, something is going on. jason: there was chair reaction this mine, and investors want it to be in play. it is the most it has gone up since april of last year. julia: wishful thinking. talking about the saudi aramco ipo, is it really going to happen? jason: reports say it may not happen at all because of political risks in just the risk

of having something this big out in the market. this is the centerpiece of the crown prince over there in saudi arabia, part of his strategy to democratize and, more important, to diversify the saudi economy. david: exactly. hole. has a budget third story, a big ipo in china, much anticipated, xiaomi. market. a gray jason: this is an ipo that is going to happen. it has been outperforming. the interesting wins on this one trade, worries about the trade war that kicked off this morning. less -- you little do have some big money, big billionaires who have tried to prop that one up. but the retail appetite has not been what people expected.

david: there a real competitors over in china. -- there are billionaires over in china. a chart to show. jason: there are 27 minted alien heirs already last year, more than last year overall -- there are 27 minted billionaires already this year, more than last year overall. david: jason kelly, thank you. coming up, the outlook on today's jobs report with nouriel york sternm the new school of business. this is bloomberg. ♪

david: the so-called french with is this weekend leaders from politics, business, and economics gathering to talk about the big challenges of today. conference'som the

nouriel roubini, professor of economics at new york university's stern school of business. welcome, professor. good to have you here. the big issues today are these u.s. onimposed by the chinese imports and vice versa, china to the u.s. last october, you wrote about three scenarios for the global economy. a bullish one having to do with the cyclical upturn paired with real reform. case where there is a failure to reform and excess leverage. a middle-class -- middle case where there is still some upswing and modest reforms. right now, there is less synchronous global growth. eurozone, japan, u.k. are slowing down. bright spots of the global economy where the u.s. and china, but now we are at the beginning of a generalized trade

war, not just between the u.s. and china. i see the u.s. will impose tariffs on other areas in europe. we have started a fight not just with mexico but also with canada. it could be perfect storm where the u.s. is engaging in trade wars with europe, with nafta partners, and china. so there could be a risk of a slowdown of global economic growth. david: at the same time, i do not know how much reform has been done at doesn't push us toward the bear case you laid out? nouriel: i do not expect the financial crisis or recession, but this global expansion was with risk off and slowdown of global economic growth. i see of these trade disputes are not going into a trade war, so a slowdown of global economic growth. then other things happen, for

example, in europe, italy, the slow-motion timebomb in the u.s., the system is undesirable, leading to inflation, leading the fed to hike more than expected. certainly lead to a slowdown that will have negative effects on the market. worries about inflation, about trade war's, backlash against big tech, worries about emerging markets, worries against spain and italy. toear that markets are going be having a downside risk rather than upside. julia: you are basically saying investors have been complacent. they seem to think this is all going to work out ok. yes, the markets so far have reacted to the risk of trade war by saying this is the art of the deal or a bargaining

chip trump is using. i think the main economic advisers right now are more moderate. he is essentially starting a trade war. wrongly, he's worried about trade deficits. i would worry more about excessive spending over income. i think it will make the trade balance even worse in the u.s. it is easier to blame it on china, europe, mexico, and so on. therefore, you have a midterm election were supposedly -- [inaudible] the administration may not too well. things trumpy two can do from an executive point of view, and one is on immigration and the other on trade. i think the will be an escalation on both fronts.

julia: what to do you think pulls the president back from the brink here? he has battles on many fronts. will it take a selloff in the market to make him pause his thought here? it could have that impact, but the president has made statements in the past saying that under my administration, the stock market is down 40%, so what if it goes down a few percent? what matters is the long-term economic success of the country. so unless there is a stock market crash, i do not think that will change much. is significant tightening of conditions with stock prices falling, trading spreads and bond yields going higher, and the dollar strengthening, that might put pressure, but we are not yet there. i do not see anything coming from market discipline.

it worked on italy, argentina, turkey. againstt see it working the u.s. and its reckless trade or lack of policies. david: is there a point at which you agree with president trump? in the scheme you laid out, it reform.t there is a general consensus there is a need to reform trade relations with china around the world, including europe. whether it is intellectual property abuse, subsidies. they have taken advantage of the wto and it is time to reform not. you cannot do that without some pain. are you some pathetic to that point with president trump? nouriel: i am some pathetic to the view that some trade practices of china, of course, are unfair. you have to engage with china and take a multilateral approach. it is not just the u.s.. it europe and japan and others.

unilateral approach rather than a lateral one. will lead trade war to retaliation, and china cannot lose face. xi jingping cannot lose face at home. while the u.s. has a trade imbalance with china, china can start making life hard on u.s. firms, on foreign and direct investment. so an escalation reading to a generalized trade war will be a negative sum game. up with wars, you end everybody being a loser essentially. there is concern about china, but the approach is confrontational. julia: i agree that china does not want to lose face, but on a net trade basis, they do not have the capacity that the u.s. has to apply tariffs. how will they push this war, as

you are calling it, further? nouriel: well, there are many the tools. first one, like they have done in the past with japan and korea with political tension, they can make life very hard for all the u.s. firms that have done hundreds of billions of dollars of investment in china, with a it is apple or auto firms and so on. secondly, this is leading already to a weakening of r&d. they're worried about a slowdown. julia: we will have to see. nouriel roubini, professor of economics at new york university. will talk jobs with alan kreuger of princeton university. this is bloomberg. ♪ retail.

under pressure like never before. and it's connected technology that's moving companies forward fast. e-commerce. real time inventory. virtual changing rooms. that's why retailers rely on comcast business to deliver consistent network speed across multiple locations. every corporate office, warehouse and store

near or far covered. leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver. david: sticking to fundamentals,

the american job market has kept going to matter what the rhetoric or politics. in about 30 minutes, we will find out just how strong it is and whether there are signs of overheating. let the games begin, president trump made the first move on trade overnight, and china responded immediately. the question now is, where will this end? the fed stays on the path of gradual rate hikes that keeps a careful watch on the possible effect on the economy from president trump's aggressive trade posture. welcome to "bloomberg daybreak." friday, july 6, jobs day. i am alongside julia chatterley. alix steel is off it we will see if there is a surprise with jobs. julia: you are right. what do the cards say? that was the question from president trump. let's look at the european boards. european markets, some tilted to

the downside in the last 20 minutes, .2% lower. it was defensive earlier with health care, staples, and utilities outperforming. some german data, industrial beating.d services pmi we are seeing this in light of tensions. dow jones future slipping, .4%. s&p futures losing slightly less. dollar-yen slightly unchanged. there.david: can you say save par for -- safe harbor? time for the morning brief. we give u.s. payrolls numbers for june. expected tos continue. on monday, president trouble

announce his choice to replace supreme court justice anthony kennedy. also on monday, angela merkel meets with chinese premier li keqiang on trade. the president heads to brussels next wednesday for nato, and then he goes to england to meet with theresa may. we've a big weekend of sports for the quarterfinals of the world cup and russia, wimbledon in england, and the tour de france starting in france. let's get headlines from outside the business world. has first word news. emma: china is accusing the u.s. of launching the largest trade war in economic history and is now striking back here at president trump opposing sections on 34 billion dollars with of chinese products just after midnight in washington. levies onposed american products like soybeans and poultry. the u.s. president says that kid lead to the u.s. to hit china with more tariffs. mike pompeo is now in north korea and has a tough job to

make sure that kim jong-un's nuclear commitments line up with president trump's expectations. kime have been reports that ramped up weapons production before the summit with president trump. british prime minister theresa may has organized a showdown with her cabinet today that threatens to through brexit talks into disarray. finalize the blueprint with its relationship with the eu after leaving the block. tradents to link regulations closely with those of the eu, but seven exit ministers want her to pair up her plans. global news 24 hours a day on air and on tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. . am emma chandra this is bloomberg. david: u.s. payrolls numbers are out in less than 30 minutes. there are expectations for 195,000 jobs to be added in june, and the unemployment rate

held steady, they think of a at 3.8%. krueger joins us from princeton university, former bloomberg chief economist. how long can we keep going this robustly? we have had so many months of strong job growth. we doi think as long as not shoot ourselves in the foot, such as having a trade war, it could go on for a while. david: consumers seem to think it is a very strong situation. andave a chart here, consumers think it is the best labor market since 2001. alan: that jives with the data. the unemployment rate is the lowest it has been since around then. recoveries do not die of old either because the fed makes a mistake, and i think this fed has been slow and cautious, or because of other external forces or policy mistakes. julia: you have pinpointed the

fact that we have greater tensions going on. we had a conversation earlier, and a lady said that is misses are being slow to react, simply not making perhaps the negative choices over hiring -- she said that businesses are being slow to react. is that normal at this stage? alan: i think they are a bit frozen. it is not clear what direction we are going with economic policy. i think the uncertainty will hang over the economy and prevented from doing as well as it should be doing. julia: are you surprised that the strength of the data has held up so well? we have seen tensions for a few months now with china, the eu, even though we just started to see the actual tariffs impact. were not bubbles building up when president trump came to office, so the economy is going to improve. massive tax cuts, we will

eventually have to pay for, added additional support to the economy. frankly, i think we should be doing better given a $1.5 trillion tax cut and given the extra spending that has been taking place in 2018. that might be offsetting some of the uncertainty, so we are continuing on before. julia: interesting you mention that. we were having a discussion earlier this week with stephen as he's, and as far concerned, he thinks the fed is pretty definition, even suggesting they could raise rates four times this year. in light of the economic stimulus provided. what is your stance on the fed? are they calibrating and right between the uncertainty and the stimulus? alan: monetary policy continues to be accommodating.

it is still supporting the expansion and i think it will for another 12 months. i believe the fed has made a decision that it would rather bear on the side of moving too slowly than too quickly. i think that is quite a defensible position. don't forget, a lot of people raised alarms when the fed started raising rates two and a half years ago that it was going to choke off the recovery, and they were wrong about that. i think janet yellen deserves a lot of credit for her forecast that inflation would recover, that we were only having a temporary decline in inflation. i think they have done a pretty good job managing the recovery in spite of the fact that they had to use an entirely new playbook, in spite of that fact that we were in uncharted waters given quantitative easing and the policies. david: the u.s. economy at large, overall, gdp is growing. it will probably grow fast in the second half. a lot of people have done well.

that is not target about economy.ion within the one of the questions with job growth and wage growth, we have a chart with real wage growth across countries,, in the u.s. is in the negative for real wage growth. why is that? alan: wage growth has been sluggish. i think worker bargaining power s very weak in the u.s. i do not think it will get stronger right away. i think continuation of the expansion should push wages of gradually. i would expect to see stronger wage growth at this point of the recovery than we have seen. labor unions are much weaker. there are policies to reduce competition, to make it harder for workers to go get a higher paying job or work for a competitor. i think the weakening labor reckoning power has been slowing wage growth. david: you are a labor

economist. changed andhas fewer people are working for corporations at all. you have done work with musicians who are working literally from gig-to-gig. the labor market has shifted away from large institutional employment. what is that about? alan: the labor market has become more polarized. there is a group of workers more independent on self-employment, trying to work on a lot of different jobs to make ends meet. and we have decreased concentration and other sections, like telecom. that his also have the effect of weakening bargaining power for has also hadd that the effect of weakening bargaining power for workers. there is the freelance union were workers are not working for the same employer but still get benefits of having an association or an organization that represents them, that is

looking out for them, that helps them with retirement savings, with health insurance. julia: if you tie that into the broader picture, we are seeing wage gains, they are just slow. it does not mean they will not continue to add slowly and for pressures to continue to build. is that the environment we are in? it does not mean that they will not go higher as we push towards ever-increasing levels of employment. goingthey have been higher, as you said, but inflation has been going higher also. has is why real wage growth been so close to zero. julia: but on the nominal point? alan: it has picked up with the tight labor market are julia: alan kreuger of princeton university, you are staying with us. next, more on the state of the u.s. jobs market and wages. and we talk with marty mucci, the paychex ceo, coming up. ♪

emma: this is "bloomberg daybreak." i'm am emma chandra. shares of deutsche bank have pared earlier gains. jpmorgan isn't denying a report it is considering to take a -- jpmorgan isnk denying a report it is considering to take a stake in the bank. shares of biogen surging in premarket trading. the company and the japanese partner showed positive results in a large clinical trial, sink patientshad -- saying

had a significant slowing of a brain disease. and the takeover bid of $4.2 billion for a u.s. company, which is strategically compelling. that is your bloomberg business flash. you we are focused on the jobs market. when it comes to small businesses, some slowing down in hiring and moderation in the pace of wage growth. joining us now from new york is marty mucci, ceo of paychex, one of the biggest payroll companies in the country. alan krueger from princeton university is still with us. of theexplain some numbers from your payroll data in terms of hiring and what we are seeing in terms of wage gains. marty: sure, this month we saw a slight drop in moderation in job growth. we still have moderate job growth and small businesses under 50 employees, but it

dropped slightly. interesting piece in wage growth, it dropped below 2.5%, annual which are running sank -- the first time in a while annual wage increase for the first time in a while. julia: do you think it is due to the environment we are dealing with, particularly given uncertainty for small businesses or is it something else? marty: we surveyed our business clients and asked why they're are not giving increases, and over 65% said they did not earn enough profit to give a wage increase. 30% said they were investing in other things like capital investments they were making. so i think small businesses did not gain as much from tax reform, and many of them do not have enough profits to gain as much from the tax reform. so they are not able to do as many of the wage increases. i think they are finding other ways to keep their wages down,

hiring a part-time or contingent workforce, looking overseas, investing in automation. they are trying to get a little bit more productivity out of workers, as opposed to raising wages, as long as they can do it. with the tax cuts, they wanted to help small businesses, but it was also about deregulation. why didn't it trickle-down or maybe it has not yet? exaggeratedk they the way regulations were holding down small businesses, first of all. as marty mentioned, the tax cuts did not do much for small businesses. it is still a little early to see the effects of the tax cuts. i am curious if companies you are talking to are finding they are having vacancies. are they having trouble filling positions? marty: they are. small businesses have a little

bit more difficult type hiring in ahey -- time hiring tight labor market. they do not have the benefit plans are the technology sometimes to attract developers, i.t. developers, and so forth, and the flexibility. they also do not have the recruiting forces to be able to find the employees and bring them on as well. so they're having a harder time in a tight labor market hiring. your point on regulation is interesting and while the federal government has lowered regulations on small businesses, the states have increased a number of regulations. if you are a multistate small business, you are having difficulty with changes in minimal wages by state and region. things are making it more difficult because the states have gone up while the feds have gone down. julia: we talked about the lack of union strength here. do you tie that to slow wage gains?

lack ofare seeing a coordinated power and ability to negotiate? marty: i do not think you see that as much with small businesses. the unions are not as strong and small businesses or not as participative in small businesses. they do not have as much profit, at least that is the data we get back from small businesses. it is not so much a power thing. the other thing is they do have to raise wages in certain areas, for certain technical trades. or certain machine shops, things like that, although we saw manufacturing up a little bit from a low point last year. david: you provided a map with four quadrants. tell us what you are seeing geographically, differences across the country. still the south is strongest, although all regions were down this month over last year. but the south still the strongest. you see construction can the new to be strong and just continue

to be strong, and manufacturing is up there. recovering from the hurricanes of last fall, you get a lot of small business work, so landscaping, roofing, rebuilding homes. you are seeing better construction. the south is still the strongest, and they have a little bit more labor workforce to choose from. the west has the highest wage increases. that is probably because of california and some areas with higher wages. the bestouth still has from an overall small business hiring perspective. julie: there is anecdotal evidence about employers being able to overlook previous convictions, the challenges they are facing with the opioid crisis, as well. small businesses compromising on quality, on skills, rather than paying up to acquire the employees they need ultimately to fill the jobs? hearing that

anecdotally, that the drug testing -- you hear that from many sources -- is becoming an issue. when trying to find certain traits, they are not able to recruit as many employees because of drug testing. some are thinking about dropping that it we have not heard that a lot, but that is happening to some degree. overall, it is putting a little bit more of a damper on it. i do not think it is a major issue yet, but you are hearing more about that. david: this chart comes from deutsche bank. it shows state-by-state. county-by-county. it shows geographic dispersion on opioid usage. you track it to some declines and labor participation rates. alan: as much of 40% of the decline in labor force are just a patient can be because of the spread of opioid drugs. as the chart shows, their big differences across regions.

the problem is not just in the rust belt. you see it in appellation but also in western nevada. i think we're seeing macroeconomic consequences from the open road crisis. julia: it is incredible really. you think of all these things that contribute to raising work in just -- rising wages. and you're taking so much of the workforce out of the market. david: marty him a talk about small business, basically saying we need to make the money some other way. we will not pay more money to get more skilled workers. i think the difficulty they're having is they do not have the profits. pricingdo not have the power, how are they going to make more profits? so they are trying to keep the wage costs down. there is ways to do that, investing in automation, having contingent workers. from a paychex perspective, there is a greater demand for hr support of small businesses

because of opiate crisis in hiring and immigration, things like that, a lot of need for hr support. very interesting right now. harassment policies, as well. they concerned that the supplies might become more expensive given a trade war we are embarking on? marty: definitely hearing that certainhe markets, small businesses importing their raw materials or supply. they are concerned about how it will impact them and whether they can get it back in price, which will put more pressure on wages if that happens. david: marty, great to have you with us. marty mucci, paychex ceo. alan krueger will stay with us. jobs reporthe genes -- of the june jobs report. we will discuss the data. this is bloomberg. ♪

julia: the dollar extending declines for a fourth straight day as we approach the key jobs data, five minutes out now. dollar-yen relatively unchanged here at back with us is vincent cignarella could what do we need to watch for in terms of market reaction? have a friend, an economist on the west coast, calling for $2.42. we will see a big jump of the dollar to start. we will dig into the average hourly earnings number. earnings are sharp, we will see an extension of the dollar trend should the numbers come through. if not, we will see earnings fall back. julia: how will they react to that? vince: if the number is shy, there is the assumption that the fed will not penciling four rate hikes. but there is this mania that cannot put their

finger on. julia: no news is good news. david: it seems like the algorithms kick in and in some human looks and says, wait, not quite what we thought. go -- the trent tends to back tod tends to go jobs data, and that is where the real market will come. allafter the headline, it falls back into place you julia: then he get a trade headline and everything changes again. what is so important here, snapshots like this or the risk the tradeine or impact, of course? the president has been quiet today. david: things for jinxing the rest of the day. julia: sorry. no news might be bad news. with us is alan krueger from princeton.

what do you think is behind the number, participation, which growth? alan: yes, and i would add to that hours and the industry detail, how services do, many faction, industry, health? why does the participation rate move? it really has not moved much at all. alan: participation rate has been flat for the last two years. david: how can it be that more people are not participated? participation rate has been a tug-of-war between the forces of retirement, which will continue for the next two decades. 10,000 people a day roughly a retiring. that causes a downward drag on participation. because thetime, labor market is so strong, more people are staying in the labor market. i think it is partly related to the opioid crisis, people not coming back, and partly because

people are finding difficulty finding a job. passing the drug test is hard. that is the typical pattern. you do not see that many people entering the labor market when it is strong. david: and it is a different job than the one they like. alan: that is a central problem we have had for quite some time. julia: we have talked about how long this kind of strength in the market can be sustained, barring any disasters on the trade front at this stage. do we start to see that priced in now to the numbers we're seeing? it is hard to tell what is going on beneath the surface. alan: historically, we do not see recoveries die of old age. a year from now, this could be the longest recovery we have had. we pretty much rent out of data at that point. i do not think there is a natural dynamic in the economy end.ecovery to naturally

julia: let me give you a snapshot of what we're seeing in the market as we head toward that payroll number. beenean markets have higher earlier on in the session, now slightly softer. .2% softer. euro popping higher. more of the dollar weakness story on that one. we watch that. dell futures, .3% lower. s&p futures, .2% lower. -- dow futures, .3% lower. health care, utilities outperforming in europe despite solid german data in industrial output and factory orders. let's look at the u.s. 10-year. 2.83%.ely unchanged, 2-year, 2.54%. we saw flattening yesterday in the session, now down to 28 basis points.

dollar-yen relatively unchanged. there. let's go to the labor with the numbers and mike mckee who will give us a snapshot of payrolls for june. mike: now we know why donald trump did not tweet, 213,000 jobs created, but the unemployment rate goes up to 4%. 7.8% for the youth unemployment rate. year over year number for earnings. african-american unemployment jumps to 6.5% from 5.9%. make no mistake, this is not a bad report. to president can point 37,000 jobs being added to the totals for april and may. big gains in manufacturing during june. 36,000 jobs, including 3000 in steel and aluminum.

7000 in metal fabricating, sectors supposedly hit by the tariffs. construction jobs added 13,000 during the month. even trucker jobs up 2500. big losers, retail, 22,000. warehouse and discount clubs lost almost a 2000 jobs last month. the rise in unemployment largely a factor of the participation raises as 600-1000 people come into the labor force. we could see a reversal of that last month. a decent report, no real implications for the fed. perhaps for the administration, something not to tweet home about. [applause] julia: you have done it now, mike. let's look at market reaction. a softer u.s. dollar already, but a slight inch lower on that mentioned.

a bit softer as far as the unemployment rate, a tick higher. average hourly earnings a little bit softer than expected. we are pushing slightly lower and a basis point lower on the u.s. 10-year. david: alan krueger is with us and vincent cignarella. we have mike mckee washington. and we have ira jersey from bloomberg. not a lot to excite the fed here do you agree? ira: i do not think the fed ge course on the spirit a little miss on wages, but ok payrolls. not a lot of change on average hours worked. i think the market was maybe thinking there would be little bit of a stronger number, so we are seeing a little bit of a rally here in the treasury market. nothing really to write home about. participation, you said it would stay flat, but it did not this time. alan: that is i agree with what

ira said. this will not have the fed change course by itself. if we do see a wave of people coming back to the labor force, i would not expect that, but that could cause an adjustment. is a greatk that point you could have good reasons for the unemployment rate to rise and bad reasons, and this is a good reason. more people looking for work and optimistic that jobs might be out there. so this is not the negative number you might think. incomeyou said that the is a little bit softer, a little bit of pressure on the u.s. dollar. this is goldilocks for the stock market. equity markets think this is less inflation. more forig win, equities than it is for the dollar to julia: and the s&p futures now .2% higher, so we

have flipped from red to green. mckee, this should be justified. when the overall economic growth comes from productivity and more people working. 600,000 was the number you told us. this could begin his for this administration. there could be genuine growth. mike: we will have to see how much is produced if we have this can of labor force growth and a number.dp you could get a decent productivity number for the second quarter. but can that be sustained? the 600,000 people who entered the labor force is probably not a sustainable number. we may see the unemployment rate come back down next month. the numbers that go into calculating it will be a little bit smaller. but a pretty good report that suggests the economy is firing all cylinders spirit julia: what about for the

manufacturing sector? if we're going to look at any result ofncerns as a trade tensions, surely that would be it. mike: we did see the big gains which scale industries, is counterintuitive to what people expected. we did not think there would be a big impact because the tariffs had just been opposed. maybe people were putting on workers before the tariffs to process as much as possible. we will have to wait and see over the next couple of months. that is something the president can point to, saying that we got jobs. with a saw about 4000 jobs created in the oil and gas sector. the even 100 mining jobs added. so manufacturing doing well in various a president has concentrated on. julia: where are the tweets? month, the revisions here, it was a 233,000 number.

it was raised up. so it was actually better than what we knew. is a relatively small revisions, to be honest. the typical revision is 250,000. pretty good.be i do not think the labor force growth we saw last month this sustainable. i think some of that is a little bit of a payback because the participation rate fell the previous three months. we will see going forward. julia: talking about the average hourly earnings, 0.1%, softer than expected. even at this point in the cycle, i would expect it to be surprising by 0.1%, not being softer. >> i think from the standpoint of the consumer, that is a very disappointing number. you think about what will cause future growth, i think it has to

come from the consumer. once the sugar-the tax cuts wears off, so i think that is a concern, and i think it is also a concern because we have had over theemendous rise past decades, and if wages continue to grow sluggishly come i do not see how that reverses. julia: and you look of the rise of inflation and the real wage growth, lack of it. david: it is both jobs day and tariffs day on the same day. what are you trading off of more? >> long-term, you have to look at the trade data. now you're coming into a weekend. are you going to get a response from the president? is he going to ratchet up the situation with china and china responding? we will almost certainly see the administration ratchet it up a bit. i see him preaching to his political base, so we could have

months to do this. the jobs data will go away in about an hour or two. i want to run over what we saw in the last one of four hours in terms of the shape of the curve and the ongoing flattening. >> and i would expect it to continue. the federal reserve is not going to change course based on these numbers. as we get further into the hiking cycle, you are likely to see the curve down another 10 basis points before the end of this year and additional flattening next year, similar the federal reserve continues its hiking cycle. thank you so much, and vincent cignarella. mike mckee will join us in just a few moments. alan krueger of princeton is staying with us. a recap of numbers. 213,000 jobs added in june. and implement rate up to 4%. average hourly earnings growth 2.7%.

a slight tick higher. 62.9% for the participation rate could u.s. dollar now down .4%. we had some softness. moves in the session. softer, inflip from the red, to positive. only minor but higher by some .1%. a look at the u.s. 10-year, a goldilocks report in terms of numbers. one basis point lower for the u.s. 10-year. david: coming up, we are going to speak to a ceo who says the u.s.-china trade dispute is already affecting the way he is hiring. nonstickdhi of gmm coatings is joining us next. bloomberg salient --

surveillance can be heard on sirius xm radio and across the country. life from new york, this is bloomberg. ♪

emma: this is "bloomberg daybreak." hour, thein the next open. mohammed el-erian, bloomberg opinion economist. now to your bloomberg business flash. there will be a new ceo at .ermany's industrial giant the ceo resigned at seven years at the helm. there is shareholder anger with slumping revenue. , and activist investors

are pushing for a major restructuring. in, aipac earners walked away from a sale. last week, bca said the bid was too low. it is no not same why longer pursuing the company. something is feeling the pinch from sluggish smartphone sales around the world. the electronics maker posted profits that missed estimates because of weak demand for its phones. but samsung semiconductor sales keep rising. helpinger while it may company and the second half of the year. david: it is jobs day. we got the numbers, showing 213,000 jobs added in june. 4%mployment rate up to because 600,000 people came into the workforce. average hourly earnings rose 2.7%, a little less than forecast.

raven gandhi -- gmmn gandhi, ceo of nonstick coatings, which is on brands such as kitchenaid and pyrex. alan krueger of princeton university is back with us. ravin, start with the jobs numbers. how does it fit with your experience and your implement situation? are you finding it difficult to higher people -- finding it difficult to hire people? ravin: yes, it is a tight labor market right now. we hire for high qualified r&d people because we do a lot of research. i think the economy is unequivocally strong. listening to the use of the term goldilocks economy for the last few minutes on a show, and i am nervous that

if things go south, we will slow down a bit. i will also say that we basically have an operation in china, so with all the tariff talk, we have pretty much stopped hiring in china because so many u.s. claims have shifted their production elsewhere. that is an interesting data point julia: you say they are shifting production elsewhere. what about quarters? is a fast decisions being made in light of what is only small amounts of tariffs so far on a small amount of numbers. responsibility of --ravin: overall, we're just above flat. very interesting data point is certain large clients come a multibillion dollar american corporations, and in some cases they have reduced their spend to china by 30% to 40% year over year, which i find to be amazing. they really mention these

tariffs and mr. trump and this playing chicken. me as ascinating to supplier to watch this political thing play out directly in my industry. these are fast decisions, but they are making an impact in the margins. i am very nervous that if the economy since to go south because of this trade war or potential trade war, who knows what is going to happen to julia: alan, that is fascinating. do they suddenly decide to reply if tensions deescalate or do they choose to spend it elsewhere? alan: it depends how sophisticated they are. the more sophisticated ones already half feet on the ground in other countries. for the last year, since mr. trump was elected, we have seen a lot of people who had a huge spend in china look at places like india, vietnam, and malaysia, eastern europe. i built a plant in india about five years ago, anticipating that china would be too

expensive. a lot of people do not believe china can be that expensive, but in some cases it is far more expensive to make stuff in china than even in america. david: what is the knock on effect? of a major corporation decides to by from india rather than china, does it affect the overall global economy? ravin: what we're seeing is a microcosm, a complication of the supply chain. what we saw after the tsunami and earthquake in japan in 2011, global supply chains were disrupted, sending gdp back. a trade war would have an even much more significant effect. are you seeing prices going up because of concern about tariffs on's deal and other inputs are going to making her products? ravin: i think the answer is yes. i do not think you see it immediately the margin.

the supply chain is an integral part, and in this moving to places like walmart and amazon.com. i think prices are definitely going up. madenk our president has the political calculus that our economy is strong, and he's willing to potentially inflict pain on us to politically hurt china. it is ok right now, but if it treads into a trade war, china has proven that they are willing to other people suffer for stupid economic policies for decades. we do not do that in america. we have midterm elections every two years. i think if people start to say painrump did x and a cause in the economy, it could be huge political problem for him. avid: i think that might be different calculation with respect to you, saying i gave you a tax break, so it is ok if i hurt you a little bit on the trade side. from where you sit, is that a

good trade for you? ravin: no. look, entrepreneurs like me that started their businesses, i think there is a fiction that just because i get a marginal tax cut that i will buy into the machine. if i do not invest in my business every single year, i will select myself for extension. i think that is fiction, that just because i got extra money, i will grow more this year. that is not true. i will say the trade think, i heard the word tsunami being used by another guest, and i agree with that. a trade war is a terrible policy from a tariff perspective. there is a saying that if you toe a hammer, you can use it hit nails into the wall or you can hit yourself in the face. i think this is hitting the u.s. in the face with tariffs. it is a lose-lose situation. julia: do you think it would

cost him in the election? grade,it is above my pay but i think there is a lot of people in the country who love what this president is doing. i would say it is more of an emotional reaction. he gets 50,000 people at rallies, and he is so good at blaming someone and saying, yeah, you know, china is bad. they are not a great actor in a certain sense, but mr. trump has that almost genius-like ability ase from thatb perspective to kind of dangerous. julia: alan krueger and ravin gandhi, thank you so much for joining us. coming up, we dig deeper into intoabor report and look what we saw in terms of the shift higher in the participation rate. bloomberg users can interact with the charts using gtv , and you can catch up on key analysis. you can save charts for future

reference. you can do a deep dive and find out what is going on in terms of the numbers. from new york, this is bloomberg. ♪

david: this is not what we're watching, it is who we are watching. we are watching mike mckee, bloomberg economics advisor. he is on the front line at the u.s. labor department. mike: it is interesting to look at the rise and labor force participation, 600-1000 people come into the labor force -- 600-1000 people come into the labor force. who are those people, and how does that affect the labor force going forward? the participation rates for people with college degrees is 74%, so there is not a lot of room to bring in additional people with college degrees to the labor force. if you go down the educational

you see people with some college, 65.3 percent, people with high school degrees, labor7.9% are in the force per do if you do not even have a high school degree, only 45.9% are in the labor force. if you're going to try to bring a lot of people into the labor force, you're going to be bringing in a lot of people without a lot of skills. that is where the market is. companies going forward, that is something to look forward to, maybe one reason we see average hourly earnings held down. you do not have to pay people without skills as much money. it may mean we're going to see a real change in the way companies do business. they are going to have to educate their workers a lot more for the modern economy or julia: closing that skills cap. the mentoring -- the manufacturing sector, gains for coal. jobs added.al

donald trump said he would bring back the jobs, and so far he has the net. metal workers and aluminum workers, that was kind of a surprise. we saw the tariffs and out it was too early to see mass layoffs, nobody anticipated mass hiring. 3000 people in the primary metals category, 7000 in metal fabricating category. companies could have added workers to try to get ahead of the tariffs, did work before hand. could mean economic theory is loss and the tariffs will help hiring. we will see. dow jones has a good talking point. -- donald trump have a good talking point. david: thank you so much from washing today, michael mckee. julie: plenty more ahead. next, the open in sight on today's jobs market. mohamed el-erian and rick rieder

join us. next week will be all about corporate earnings. companies reporting early in the week. a big day for financials, jpmorgan, wells fargo, citi, and the 13th. on friday ooh. a quick check on markets. we saw a slightly softer u.s. dollar a touch higher for euro-dollar. stoxx 600 still under pressure, .2%. dow jones future still in the red but barely. s&p futures unchanged. the open is next, and this is bloomberg. ♪

♪ jonathan: from new york city, i am jonathan ferro. this is the countdown to the open.

coming up, shots fired in the u.s.-china trade war. hanging over investor sentiment, trait offering one more excuse to steamroll the treasury curve. the labor market still absorbing spare capacity, unemployment rising, wage growth slowing. 30 minutes away from the opening bell with futures unchanged. to 1.1744. up yields in treasuries up two basis points. the payrolls report, the economy adding 213,000 jobs with the unemployment rate rising to 4%. alan krueger weighing in on the results. alan: this will not change the fed to change course by itself.