Transcripts For BLOOMBERG Bloomberg Go 20160304

We are joined by warren. Warren good to be here. David now we get first word from nejra cehic. Trump signaled he would be willing to moderate his stance. Donald trump in terms of immigration and almost anything else, theyre almost has to be some time and pull and deal. Deal, hetched ted stood a day and a half or something. What came of it . Nothing. You have to have some flexibility. Nejra all of them said they would support trump if he wins the nomination. There is a familiar threat from north korea. Kim jongun has ordered forces to be ready to launch Nuclear War Heads at any moment. T came after the country more to the country to prepare of sanctions from the united nations. And the pace of chinas military spending growth was increase between 7 and 8 this year, but the smallest since 2010. The estimate was released before tomorrows National China peoples congress. Global news 24 hours a day, powered by 2400 journalists in more than 150 news bureaus around the world, i am nejra cehic. Matt, over to you. Matt take a look at futures. We have gains across the board. Albeit small gains. Stocks are on pace for the best winning streak of 2015. The s p 500 is at an eight week high. 1993, adding 2. 5 points to futures. We will see what happens when the cash trade kicks in. Dow futures are up 26 points. Asia has its best week of gains this year. And of course, francine, youre talking about ripping up the script. I assume you are looking forward to tomorrow, or saturday in china, when they have the National Peoples congress. Francine it is like parliament. China is going to add more stimulus. You see the coming through in chinese numbers, and asia has been a roll has been on a roll all week. Even with the downgrade, the slow downgrades yesterday, including bhp billiton, but php billiton but bhp billiton is on a care. Take a look at oil and gold. For its third weekly gain, and that is the third time we have had three weeks of gains ands may of 2015. Ou can see crude gold is now in a bull market. It has the biggest advance among all of commodities, up more than 20 since the december low. It is currently at a onemonth high. Gold has been on a tear. Take a look at the terminal here. I have a cos. It is a great tool that you can use to look at the estimates for any number of economic releases. But if you look get it for nonfarm payrolls, we see the average estimate is 193. It is a great look at the spread across all of the data points we enter in order to get this estimate. By the way, speaking of that, you can enter your own estimate. We have our whisper page. Touch this dropdown box, you can pick nonfarm payrolls and a number of other data points. Everyone here has been playing. For the first time ever, i put in a conservative guess. Usually i wanted to be way off the charts. Francine how much . Matt i put in 1. 80 for my guess. Hillary put in 2. 10. She is optimistic. But i hear a lot of bears, maybe because i talked to a lot of bears lately. Employers are forecast to have added 195,000 jobs last month. For more on what to expect, lets bring in rbc chief of capital markets, tom purcell he. Tom the short answer is, no. We are looking for a better than consensus number today, although mostly because of technical reasons. 2. 25 to 2. 50if materializes, for the fed it is really about what is going on around the globe, how it is impacting conditions. When the march meeting comes around, those are the themes that janet yellen will drive home. The headline data says things are ok at the moment, how do they communicate their way around that . Domestic rates are still pretty solid. Tom we wrote about this in our most recent weekly, the idea that it is not about i think the notion of data dependency needs to be brought out to some extent. Bill dudley did that in september, where he highlighted in the speech he gave that data dependency is not just about u. S. Economic data, it is about these things going on around the world. When the march meeting comes around, those are good things janet yellen will highlight. The reality is that it is unclear, the stresses coming out of e. M. In china, and how they will play into u. S. Economic data. That is how they take a pass. I tell peoplee we are paid to tell clients what we think the fed will do, not what we think they should do. The reality is that we think they should raise rates in march. They should have been raising rates over the course of the last year, but the fed will take a pass again. What we are getting today is not just jobs added, but other numbers as well. Among those are wage types. Is there under among those among those are wage hikes. Make a blackove to and white conversation when in fact the reality exists in the shade of gray. I always test people on this. If going from 1. 5 to 2. 5 in son itwhy 201 old is going from 1. 5 to 2. 5 and increase . , yes. Month old son knows wages have already been on the rise, and we expect that will remain the case. Have for the most part been relatively broadbased. There is wage pressure. And not to belabor the point, but you have to consider that at 4. 9 , the feds measure of the nehru, you are seeing pressures. It resonates for them. Nevertheless, u. S. Fundamentals remain sound. Francine is tom wright . When you look at the risks around the world, china, the premier saying it looks worse than expected, you have negative rates around the world, you have a u. S. President ial election which is not going rosily. Why hike . At theo not so much look fed as being in a tightening cycle but more relaxing to the normalization of rates. The zero rate policy was completely appropriate in the depths of the financial crisis, late 2008, 2009. The data dependent, some of the data and market action, it would be difficult. Francine the counter argument is that they lose a window of opportunity. Theney do not hike soon, depending on who gets into the white house, it may be or difficult. Warren they would like to do more this year, but until the data comes out more positive, it could give them some help. I would be very surprised if they would tight right away. Jon i want to take to the markets very quickly. Treasuries are heading for a third week of losses. I still have a twoyear with an 82basis point yield. Do you expect yields to be pinned down at the front end still . Tom we do. Over the last stronger data points, the yields have ears and the yields have risen. I think there are enough global stresses where he keeps a ceiling over treasuries at this point. I would go back to something that i think it is an important point. The fed has changed the narrative. I do not want to beat up too much on them because they have tried. People have to get comfortable with the notion that this is not a tightening cycle, it is a removal of accommodations cycle. There is a genuine difference. We are below what neutral is, get to neutral and pass neutral, that is when you start tightening policy. For the time being, the fed is removing accommodation. Francine you could argue that they are tightening because of the rest of the world moving into negative territory. I know it is semantics. Tom i disagree with that. Because the rest of the worlds tightening, the fed is also tightening policy . That is not how the transfer mechanism works. I would highlight that in a backdrop where you are taking the apple back, in the context of Unemployment Rate that continues to drift down 4 , itch is hardly heroic only takes 75,000 jobs to keep the employment rate steady. Lets be clear on this point. I might be the first economist to say i have no idea what chinas gdp is, and i do not know if i am worried about the specific number. But the private pmi has been below breakeven for the last three to four years. China has been in contraction for years now. The u. S. Has withstood that perfectly fine. David markets are global, congress is not. Thatess rights statutes told the fed what it should be looking at. One is u. S. Inflation and the other is u. S. Jobs. Re are some increases there are some increases in inflation, as you know. There are indications of growing inflation. Does the fed have to Pay Attention to that rather than china or europe . Tom you are tugging at my heartstrings on this. This is the thing we have been talking about for so long. The fed has a dual mandate. They are not china gdp or e. M. Gdp. At the end of the day, here is what you might be left with at the end of this year. 4 , keyloyment rate at measures of inflation that are not just north of the fed forecast for 2016, but after longterm target for inflation. How the narrative involves how the narrative is all, the fed is behind the curve now given all these factors. I am sympathetic to that view. , thank youporcelli very much. Warren, you are staying with us. Matt i want to give our viewers a deeper dive into bloomberg on jobs day. One function that we use often. Ere is ecmi i have a plugin for the nonfarm payrolls. This shows you the reaction to a certain security as well as the upper bound over a time period and the lower bound. 1 index,ut in the esm and it shows you over this time period what the reaction has been. April of last year was a huge disappointment, missing expected forecast by 5 . January beat by about 5 . Here you can see the reaction of the s p last april. It follows along a distribution that you might expect, but it is interesting because it helps you chart what the average outcome would be, and it is great at looking at what Market Reaction we could have when we get the number. At 8 31 thethis number comes out, so you do not want to miss it. Ecmi on the bloomberg terminal. Coming up, the Peoples National congress. We have a report from beijing on bloomberg. Is considering ahoo new plan to salvage itself. It may bundle is yahoo japan state and sell them off. Yahoo japan is the companys most profitable website. Facebook is taking steps to raise its tax bill. Facebook was widely criticized when it was revealed the company pays a little more than 6,000 in taxes in 2014. The richest man in china is creating the Worlds Largest chain of Movie Theaters. Amc entertainment has agreed to cinema for 1. 5 billion in cash. The deal would combine the second and fourth largest Movie Theater chains in the u. S. Jon . Chinas political elite are in beijing for the National Peoples congress to approve the companys latest fiveyour economic plan. Amidst growth concerns and a fragile currency. Our correspondent is in beijing. Great to have you on the program. What do we expect from the meeting over the weekend and for the next 10 days . Ahead of saturdays opening ceremony, a lot of analysts are managing expectations. Chinese coordinators are facing a jealous it are facing a delicate balancing act. They are trying to make good on the promises on supplyside reforms that are going to be very painful. At how they will be able to resolve these conflicts. Cutting capacity will mean the loss of millions of jobs. One of the latest reports we have gotten unverified, somewhere in the realm of 6 million jobs to 8 million jobs. I do not know if you can tell behind me, but it has been a horrible couple of days for pollution, for environmental reasons as well as economic ones. Others is the debt scenario. Thetto gdp debttogdp is soaring. Saying thealysts are upward trajectory is unsustainable, so we are looking for policy reforms to see how beijing plans to deal with that. The art of the news this the others that news this morning that has the state been at work to support stocks again . Haidu it is quite interesting, really. We had the big military parade last year, and we have seen it again. The National Team coming in to buy up stocks. There is nothing new. It has been less of an occurrence ever since the last stock market turnover last summer. In terms of what were looking areout of the npc, we focusing more on currency policy. Jawboning of expectations. They have been talking about this currency basket of sorts because policymakers do not want the market to freak out every time the yuan weakens against the u. S. Every time the yuan weakens against the u. S. Dollar. It is giving beijing a bit of a buffer in terms of how it is managing movement. We are kind of managing expectations when it comes to fx system reform as well as the internationalization of the currency. That path is made more difficult from the weakness we have seen driven by market forces. Jon thank you very much. Market forces in focus in china for one reason. Gets sportation work the transportation people get the work. Francine we do not know whether we trust the chinese authorities. It goes back to, if you are an investor, do you trust the data . Do you look at the interventionism as saying they do not want anything bad, and i think there is Something Better with the chinese economy . Warren as tom suggested earlier, things coming out of china are very cloudy. We try not to look at the minute by minute data but discern longterm trends. It is good to see the government respond to the slowdown. It is amazing the impact, as china has slowed down the impact on commodity prices, how that has rippled across the globe. It has affected the bond market in terms of yield spreads,. David our guest yesterday talked at length about china, describing it as a patient that has had a major heart operation. There is going to be some recovery. At the same time, he really endorsed the competency of the chinese authorities, saying they are as good as anybody in the world right now. Jon with a big asterisk. It is a really tough call because at the same time they are loyal to the party. They do not want anything changing the party, but at the same time maybe they are becoming more investor friendly. Francine, thank you very much. Coming up in the next hour, we have an exclusive interview with bill gross, fund manager at Janus Capital. You do not want to miss that interview. And we are seven minutes away from the jobs report. Good morning to you all. David Warren Pierson is still with us. We are just a little over an hour away from jobs numbers. What will you look at in particular . Warren we are looking at jobs growth. I think what we will look at more intently in the market is wage information. Everybody is focused on inflation. Is there inflation . Is it beginning to grow . Until you see an increase in wages, inflation will not have any staying power. Data is whatage the markets will focus on. Jon thank you for joining us this morning. Up next, the other half of the Surveillance Team joins us. It is tom keene with the morning mustread, and breaking news from brazil. David you are watching bloomberg. One hour from now, we will break the february job numbers. Tom keene is with us for his morning must read. It sometimes looks like i cringe when you come because it is another book to read. Tom the only one who has read this is michael mckee. Were talking to northwestern university. David we will get to that in a minute, but unfortunately, small print. We also have prancing joining us. First, first word. The most romantic twist yet. Formerraided the home of president of brazil. Has been linked to corruption scandals that landed dozens of politician leaders in jail. He denied wrongdoing. Apple getting bignames involved in the fight over unlocking the dead terrorists iphone. Microsoft, google and facebook. The Companies Say they were just the government argument that the law enforces them to undermine security features. Obama plans to stay in washington once he leaves the white house for a couple of beers. He told a group in milwaukee that he and his wife have not figured out where they want to live but will stay in washington for a wild southern younger daughter can finish high school. Global news powered washington so his younger daughter can finish high school. Over to you. Matt taking a look at a couple of companies on the move this morning. Before we get the big jobs number, or stock, smith wesson not only beat earnings for the quarter reporting, but they eat it by a large margin. Beautify large margin. We were looking for 656 million and they will have full year sales well over 700 million for the full year, so smith wesson is doing incredibly well. Sturm ruger is doing well. I like to look at the comp chart when i look at the stocks over longer periods of time. It reinvests dividends and put them on a fiveyear or typically fiveyear chart. This is smith wesson and whites, this is sturm ruger and 2000 innd the russell yellow, and you can see that if you put 1 million in smith wesson five years ago and reinvested your dividends, you would basically have 6. 4 million today. An incredible return. I think pete told me this morning that the average american owns 1. 3 guns. Other earnings out this morning. Hpe coming out with their First Quarter of earnings since the split, first full quarter beating the estimates. Also, forecasting profit for this quarter that beats the street estimates as well. Hewlettpackard in her 10 in the premarket. Hp gets aning upgrade from a number of analysts. The downgrade can, including with earnings that missed estimates. They came out with an adjusted estimate of 64 cents or they Beat Estimates 54 cents and looking up 45 cents for the stock is down 7. 5 . This Company Makes the chips for the gopro cameras and that has been a losing story of late. Earlier. About minors they have had their best big so far this year. This morning, up 6. 5 . Anglo and rio tinto gaming as well, so as we see the underlying commodity rise, even as analysts like bank of america cut estimates on bhp billiton, you can see the stocks rising. Maybe the best time to cut your estimates went the stock tops out, right . [laughter] jon 88 . We have david herro on the program earlier this week and he talked about how he talked to the ceo of anglo at the bottom when the stock bottomed and he was this close to buying and he did not. Not miller, thank you. On this job stay, tom kane . Tom keene . A great conversation with professor gordon. This is our great labor economist. Robert gordon has so many accomplishments in economics, including a textbook coming out of the modern age of rational expectation. For him to join us on surveillance was significant. Here is one quote that goes to the anxiety americans face the posturing of innovations of facebook, apple, the rest of it is not a promising avenue for government policy intervention as the American Innovation machine operates healthily on its own. I would suggest in todays jobs report, it works outside of all the other dynamics we have. It goes back to the heart of the matter that chronicles manufacturing, henry ford, all of that. Do you want to make 100,000 or 200,000 jobs here or can you innovate and make 5000 jobs . David no question that innovation is the key and i am not going to disagree, but there are others to take a different point of view that at least saying since world war ii, most have come on the back of governmentfunded research. Take the iphone. Ofost all the major features the iphone came out of government investment. Francine one of the other points that the professor was saying, if you look at productivity, it goes to wage growth because it is difficult to measure productivity that puts a damper no wage growth, but you could argue that with this technological innovation, we need to stop talking about productivity the way we have over the last 50 years. Tom he is not a market economist like Carl Riccadonna, and i went to make sure that professor gordon is optimistic where we are in the cycle that we will finally get a good part of america that has not participated or to begin to participate in the next few years. Jon what does this mean for the lower end of this pay scale . You mention facebook. Heres a 300 billion company with 12,000 figures, isnt that a problem . Tom you have so much wisdom. Can you go back to the United Kingdom . You look at it on this job stay, and the emails that we get, the tweet, all of that that we get about the anxiousness that is out there is tangible. Professor gordon, including michael, saying that tightness of labor supply is finally there. David one of the things we continue to look at throughout the program is the relationship between the number of jobs and withholding tax on payroll because as the number of jobs has gone up, payroll withholding has not. Income inequality is something to look at, similar situation for the u. K. Jon my question for surveillance this morning, in the conversation to have with the columnists, the labor market comes up every payrolls day with a solid report, 200,000 added, and Unemployment Rates at the 5 , but there was a big asterisk thinking about the labor market the underemployment, Participation Rates, etc. What to economists are you about that . Tom it has to come back and it has not. It still has not rebounded. David matt has a chart. Matt after you pointed this out to me, david, this is unemployment versus or non foreign payroll numbers versus withholding data, tax withholding, and i spoke to richie on her own and he said one of the reasons you see this is a lot of the jobs we added in the boom were people working oil, working on shale, north dakota, and those jobs are not fulltime jobs with benefits and they withhold taxes so that when you get fired, you are paid unemployment benefits. Those were contracting jobs, so in they lost their jobs, they did not get anything, but they did not pay in either, so you see the tax withholding data come down but able going up. You can see this on g btv448 for this chart. David thank you. Really good conversation. We will turn to wall street and banks. Two of the biggest investment banks plan to cut more jobs. Goldman sachs will eliminate more than five percent of their traders and sales people in the fixed income business. Bank of america will make cuts in trading and investment banking. Michael moore joins us from london. We had a conversation yesterday about bill gross comments our banks are headed. It is not some a good news. Michael no, i think this is marginal tweaking but trying to get the cost structure down for banks. In have seen a massive move the fixed income revenue over the last five years. Almost 2010, we had 90, 100 billion of fixed income trading revenue. Now we are down to 60, so that has been a major shift for these tanks and they are trying to get to a cost structure that factors in that new world. Jon i want to zoom in on that number, 5 of trade is an sales people. What is the turnover traditionally and is 5 a big deal . Michael the report was more than the typical 5 . I percent is goldmans annual call 5 is goldmans annual call for allowing you Summer Hiring and they have gone beyond that this year. I think that reflects the poor environment is on the first couple of months for the trading. More and we are seeing more layoffs because the economy is not Getting Better and because the banks have a huge problem with fixed income business. What do we need to see for it to turn around . Twoael i think you have forces at work, the cyclical side of things. Lefteed some kind of volatile trading environment, whether that is driven by Interest Rates are commodities. You need people to engage once again. I think a lot of investors have moved to the sidelines given the rough first month. Side, i thinkr you will continue to see some jobs rolloff from the banks as you move more toward electronic trading, even on the retail side more you see people move to electronic banking. Even if things improve, that may not stop the job cuts. David is this relatively simple in the end . If you have to grow your revenue or topline cut your costs, and the fact is the banks seem to be essentially conceding and they wont be able to really grow the top line and they dont see that right now, so they have to cut costs and they have no choice. Michael especially in the trading business. It is so dependent on the market that you kind of focus on what you can control, which is the cost side of things. It is only two months in, but we are looking at another decline, which would be a think five out of six years when trading revenue has gone down. If you are not growing that, you do the only thing you can control. Francine we are talking about goldman, bank of america, and one of the themes, our european banks still giving a free lunch to the u. S. Or should we be more aggressive in europe in combating wall street being the only once a Credible Investment banks . Think the europeans have kind of made more transformational moves in the u. S. Goldman in particular has been one of the steadier shops coping that fixed income rebounds. The have not cut as to radically as some of the others trying to pick up share as other sleep the business, but as others leave the business, but you have seen this acknowledgment that this cycle has gone on longer than they anticipated, so they have started to cut back both on the capital and headcount side. But you are seeing from the u. S. Competitors are smaller moves, smaller cuts and when you have seen from some of the europeans. Jon bloombergs Michael Moore from london, thank you area much. The most read story on the bloomberg this morning. Coleman ba goldman and bankamerica dismissing traders. Also, the former brazilian president was detained by in ae, targeted by Police Corruption scandal. A live report, next. 50 minutes or it from the payrolls report. Futures, where are you . Slightly positive this morning. Matt welcome back. I am in the hpe greenroom. Later, we hear from bill gross on management on bloomberg go. This is a Bloomberg Business flash. Investorss reinsured with her skeptical moved to break up the hewlettpackard that the new one will may have profits in the quarter that may exceed estimates. Hp enterprise targets corporate customers with hightech care. Samsonite says it wants to make sure the quality of luxury Luggage Company does not change. The Worlds Largest brand and luggage maker has agreed to buy tumi for about 1. 8 billion in cash, representing a 33 premium to the Closing Price on wednesday. In zimbabwe, the president says that diamond smuggling has cost the country more than 13 billion. In response, the president has created a new company that is taking over some ball boys diamond mines. It is their largest source of Foreign Exchange taking over some diamond mines. It is their largest source of Foreign Exchange. Jon thank you. Former brazilian president isnt a corruption twist. Of the Government Team for Bloomberg News joins us. John, try to make sense of this. Lula, that is a new element. Can you break it down . John i think it is important and very difficult to understate the sheer importance of former president lula in brazilian politics. He is the most towering figure in the last two decades in brazilian politics. We do not know if he has been arrested or he has not been only been question. The fact that his home is been rated and he is answering questions is a dramatic twist. It is important to bear in mind that this is separate to the impeachment proceedings going on atinst president rousseff the moment, but given the fact that rousseff is a prodigy effectively of former president lula, this will damage her, as well. David we went to bring in our brazilian chief. He is on the phone, ray, i knew about the scandal, i knew about rousseffs possible involvement, but i have not understood this affecting lula. Is this a new development that he could be connected . Ray they have been moving in on for and the Workers Party quite some time. This is probably the most germanic event yet. The most the most dramatic event yet, the most in recent years. Prosecutors say they have evidence that lula received kickbacks from that schema corruption at petrobras through properties, donations and what isy call or what they say camouflaged speakers fee. He is been on the circuit for quite some time and some basic came from kickbacks at petrobras. He had only been brought into questioning. He has been resisting that for some time. To getyers have managed market for couple of days and the judge said, no, you are coming in. Francine stocks are rallying it is up, but if you have corruptions worsening, meaning closer to an impeachment, meaning closer to resolution for investors on the political stalemate and brazil. Grade a bizarre situation, but investors are seeing a lameduck government that is not getting anything done. She is not able to pull this country out of the worst recession in over 100 years. They are seeing this as a potential step toward a resolution of the stalemate, whether she is impeached, asked to resign or whether her reelection in 2014 is an old. They see light at the end of the tunnel. Jon just to spin things forward, the probe has been around for a long time and it seems to have widened. As far as you concerned, how much longer will it take . Francine said the worst the news cap, investors and clear getting to the end of the road, good for markets, but how close are we to the end of the road . Ray as a result impeachment john as with all impeachment proceedings, it takes a long time and it is difficult to get a date on closure, but as ray was saying, this will accelerate. There is a good chance it will accelerate the impeachment proceedings against rousseff. One analyst this morning said that we essentially will have a ,ombie government in brazil incapable of taking decisions, so there will be pressure to accelerate the impeachment proceedings taking place. Again, hard to give you a firm date on a resolution, but it will accelerate the process of taking it to an a game. It cannot be ruled out that rousseff would stay on as resume, but she is looking weaker this morning after the morning events. David john talks about a zombie government and it sounds apropos because it is not just the parliament but a lot of the government. Francine you have to think about what the message would have to be for markets to rally, it is in the police raid. David john ray, thank you. John and ray, thank you. We are coming off the charts. Coming up next. Welcome back. We are 36 minutes away from the payrolls report. I am pleased to say that bloombergs cheap economist Carl Riccadonna chief economist Carl Riccadonna joins us. You can start and matt miller can wait. [laughter] focus on the a key jobs report today and over the next six months in what we can see in the chart where the Unemployment Rates is pointed upside down versus average Hourly Earnings, so Wage Inflation. The moral of this story is if you look at this long historical relationship, we can see as the Unemployment Rate moves lawyer, this creates wage pressure. Not a perfect fit, but at the Unemployment Rate is in the 4. 5 percent of the later this year, that closing you that Wage Inflation should be running a point faster,e meaning a lot more income heading into household pocketbooks to support Consumer Spending. David if you want to reach the chart, you can see how that will reach it. Carl the orange line is unemployment plotted upside down and the white is average Hourly Earnings. This also shows a very steady trajectory of the unemployment path. Matt i have something i think is interesting. Unemployment is grafton read and this is a link back to the 1980s. You can see this decade and the recovery has been substantial from the great recession. The unemployment to population ratio is graft in blue. In blue. D there is a massive divergent, you may think of it as a demographic shift if you believe it alan krueger says, as more people retire, it is the pig and the python, so as this comes out, you see that massive diversion. Arl this is why you say that overstate the improvement of the labor market. Matt people have to retire. They cannot work forever. I have this graph. Sam sent me this chart. This is the under 35 proportion of labor report and over 35. Jon that is two charts. Matt i did not know it was a battle. David thank you for joining us. We are just 35 minutes away from the jobs numbers on bloomberg. David countdown to the job report. The u. S. Economic outlook has grown more uncertain since the rate hike. Wall street and investors may look past the headline number and see how much reaches have grown to determine how strong the economy really is. Capital fund manager bill gross reacts to the latest rate on the economy this hour. This is the second hour of bloomberg. I am david westin with jon and francine. So excited. Am maybe it will be better than people think. Alan krueger, professor of economics at princeton and former chairman of the council of economic advisers, is here with us. Jon also, rich is also here and a special programming note. The former republican presence of candidate mitt romney bill gross is coming up in 30 minutes. Payroll is just under 30 minutes away. Lets go to julie hyman. Trump was on the defensive in the debate in detroit. Hours after 2012 mitt romney called a front runner phony and fraud. The current crop of candidates take their shots. Here is marco rubio. Marco there is no doubt that donald has done well, but the numbers also say that two thirds of the people who would cast a vote in the Republican Caucus have voted against you. They do not want you to be the nominee. The reason why is because we are not going to turn over the conservative movement to someone whose positions are not conservative. Still, marco rubio, ted cruz and john kasich said that if donald trump wins, they will support him. In brazil, equity futures rose as much as 6 after they detained the former president Luiz Inacio Lula da silva in a corruption probe. That has revived speculation that scandal could bring down the current president dilma rousseff. It has already led to the arrest of some of the top political workers. One of the closest encounters reported between a commercial jet and a drone. Regulators say that last month, an Unmanned Aircraft came within five feet of a jet landing in paris. The pilot was able to take action. Drones are banned from flying near airports. Global news powered by our 2400 journalists and more than 150 news bureaus around the world. Over to matt. Matt thank you. Gains butth not huge gains nonetheless on s p 500 futures, the dow jones many contracts and nasdaq as well. I am incredibly excited. I almost want to walk over there. I will not, but we have so much to show viewers. Take a look at the charts on the bloomberg right now. G btv442. For the first time, what we have is goneh this blue line through twitter, which a lot of journalists use, and we graph all expectations on twitter. We collect all that data and we put out an average. The white line is the actual nsp number and i asked the revisions, but well have the kruegerke because alan is here. Twitter for the last few months has been doing pretty well predicting the nonforeign payroll number. Green is the function, and i have showed you that, but if you have not signed up, pull up whis and you can put in your guess. You only have until five minutes before the release, but that is a great function and we can see what all the users are expecting. I put in about 180 because i am they are shred now because i have been talking to bearish ish right nowr because i have been talking to bearish people. Gold is up 20 . Right now, 1265 even with a gain of 670 today, so the fear trade remains even as the equity market rises, even as oil prices. Oil is except for the third weekly gain, First Time Since may of last year that we have seen three weeks of game in crude. Andall gain, but the stock Oil Correlation has been strong lately. Lets take a look at currencies because real moves in the currency market. Here is the dollar. I went to look at the dollar pairs, but the spot index is down a little. The real action is in the brazilian reality. Real. We had a jump earlier in the rea. Real. The 2. 3 move is just an absolute earthquake in terms of what currency moves are. If you take a look at the wb index, we have had real moves in debt as well. This is the world bond screen. I use this to look at the different countries. ,ou can see brazilian debt Serious Movement yielding right now 5. 8 . Movement,particularly accumulative movement, shows you where the most movement is on issues of world that and is a list strongest cmi today. That brazilian news is moving markets. Interesting stuff. The job number will move markets as well. David they clearly liked the markets in brazil. As francine pointed out, ironic. Francine counterintuitive. David exactly. U. S. Economyasting adding 100 95 thousand jobs last month. Alan krueger, lets talk about the top line. What do you expect and what are you looking for . From i think anything 150,000 to 200,000 would be solid. I think we are going to start moderate job growth because the Unemployment Rate is below 5 and the job market is getting pretty close to full employment. I think that will put pressure on employers, make it harder for them to find jobs and that is pushing up wages. Jon where is unemployment . It keeps coming down, down, so where do you think it is . Alan if you define it as the point where Unemployment Rates are low and putting upward pressure on wages, i think we are up right now. We could go past that point because inflation is so low and there is headroom to do that. I do not think that means that we are at a panic point, but the research that i have done and others have done, suggest 5 was broken the turning point and we are roughly there. Francine doing need to look at wage growth and doesnt have a lot further to go . Alan i think sunken wages is the state of affairs in the wage market right now. Rich i suspect that i dont know that 5 i dont know if you could put the point rest amid point estimate on that. Maybe this 4. 5 to 5. 5, somewhere in there. I would look at ranges rather than trying to do a point estimate. That itlan, i recall was an annual 2. 5 wage growth, which was a little off. When this happens, people amount and were skeptics and said, if you look at real withholding tactics on payrolls, they are therefore, we are getting a false positive on jobs numbers. What you stated that . What do you say to that . Alan i think the best indicators will be what we get today the theyre getting mixed signals. In the Establishment Survey today, the 2. 5 or. 5 in january was quite strong, but the employment cost index has been more next. I think the jury is still out says,agree with what rich i would put arranged around the National Rate of unemployment or the rate consistent with stable inflation. It tends to move around overtime, which makes our job harder. Jon another thing making it harder, is that the employment components, of which have not been great and week, the most recent was week as well, can you extrapolate to say that this is significant for the number we are looking at today . Rich there is. This is not 1950 and we are a service economy. We do not make stuff, we do stuff. You should be looking at the Services Components of all of these series. As you mentioned, the isn index or the employment component of ant, fell below 50, which is expansion or contraction level for the First Time Since february 4014. Pitfalls there and if you look at the number of Services Jobs created in that month it services there and if you look at the number of service jobs created in that month, i think it was the subsidy level in the service and employment component, some would say for this cold report that comes out in a couple of minutes, probably on the softer side, not an implosion by any means, but somewhere in the 150 jon tom keene is looking for 95 k 195 k rich i hope it is to 95, but i think employers were spooked by the market volatility like in january. That probably carried on into this. For lowincome workers. Francine we are not talking about the u. S. Jobs report stakes, but what does it take for that number today to make investors move perception on when the fed or what the fed does in march . Alan my guess is the top line is strong, safe over 200,000, and if wage growth is close to last month, that will provoke a reaction for markets on the expectation that the fed is more likely to raise rates when they meet in a couple of weeks. On the other hand, if labor force chris at the participation shows recovery, that suggests there is more headroom for the job market to get tighter without putting as much upward rusher on wages. Jon we have seen significant Financial Market relativity, significant downgrade of what everyone anticipates to happen in the Global Economy later this year, but the u. S. Dated that the fed should be following, and we have been talking about this, has been ok. It has climbed higher, gdp was an upside surprise, the labor Market Report today is expected i dont want to say anything 20 minutes a day but expected to be solid. The fed and the message is data dependent, have they backed themselves into a corner ahead of the meeting . Alan i do think so. I think they should be data weendent and the problems have other problems we want to have. The problem is at what pace she normalize Monetary Policy should we normalize Monetary Policy . I think it is fortunate to be in the position that we are in, where we can address these problems. The think you had discussion of the global fed has to be data dependent not only on data out of washington, d. C. , but the global fed needs to be data dependent on data that comes out of china, out of europe, and that cannot be overlooked in the Global Economy. David if it were a global fed but it is a washington fed. Matt it clearly is. David it has to statute. Matt that is a good point, but i think they overstepped the statute. Are you saying you think the fed should be audited, david . [laughter] alan they need to be aware that it affects the u. S. Economy. Matt or they can put on blinders if that is how you would like them to operate. This is the initial jobless claims over the last five years and an encouraging trend. When we start bouncing around 260, 270, how much lower can we go . Alan,ch lower can we go, or is there some level that is a bottom . Alan first of all, beautiful chart. Matt thank you. Alan even though that is noisy and i look at the fourweek average as a police as opposed to weekly, that is our best short run height iigh frequency data indicator. One of the reasons why it has gone down in addition to the recovery is demographics. We are seeing less turning in the u. S. Labor market because the workforce is older, so i would not be surprised if interests, little bit lower if recovery continues. Matt did you see the chart one of our viewers sent in . This is the proportion of the. Abor force under 35 this is the proportion over 35. It is normalized from march 2009, so this shows you that the labor force is indeed getting younger. Is that a good thing . Is that because of immigration, the baby boomers going out . Why is that . Alan i am a bit surprised by the numbers because if you look at growth of the labor force, it has tended to be in the oldest group, 55 and older. I will matt i will share these indexes with you. Alan i will be happy to double check. Rich a lot of jobs when you are furloughed or dismissed you are not entitled to unemployment benefit insurance. That has happened a lot, certainly in the Energy Sector when we have all these drillers who headed up to north dakota saying, i will make money, and they are independent contractors, so when the boom busted, they did not have a job and they cannot claim unemployment benefit insurance. There is a lot of that going on. There is a depression in the energy market. Are not know the claims great indicators, but i just do theree that i see that are a lot of things missing in this, and particularly in the services because we are Services Economy and we dont get to capture some of the layouts and dismissals. Jon you liked the first chart and alan krueger will be staying with us. Coming up in about 15 minutes, the payrolls report and bill gross will be live on Bloomberg Radio and tv. 15 minutes away. Futures positive this morning. Is bloomberg in new york city and america like bloomberg in europe because from a global perspective of the u. S. Japan report, had the perspectivenge of the u. S. Jobs report, the head of Foreign Exchange is with us. Welcome. What are you expecting today . They would love the store number because they would love the fed raising rates because they are sitting there trying to work out what they can do. There was a story on bloomberg of what they can do at the ecb without hurting banks. If we cut deeper into negative territory on rates but banks do not cut into negative territory on checking accounts and small deposits, it is going to be they on the banking system, so they would love some help. Lets luke standing assume they do not raise rates and the steady the course and stay where they are, does that help . I dont know if anybody is really thinking there is a likelihood of a rate hike. Veryumbers of have to be strong. I think with the euro needs to go down is a change in the tone of the market where firms like southside firms are not busy revising down the number of rate hikes they get in the next 18 months from the fed to one or none and they start to say, yes, maybe we get one in june and several more this year. Once you change that trend of direction of expectation back toward the fed rate, closer to 2 , i think he will see the weakening euro or get other banks, particularly the ecb, more rope to play with. Francine i will go rogue and probably never be invited on bloomberg again but i have been here five days in new york and we need to talk about donald trump. Economists are telling me the economy is not dead yet. Job gains will remain decent, productivity is low, but you have a valid that is putting someone with radical ideas closer to the nomination, so how do you square up the two . Alan i think the Republican Party has gone off the rails. If you watched the debate last night, it does not represent the best of the United States. I do not think it is possible to explain what is going on in the Republican Party by the economy. I do not think that is the driving force. Go back 40 years, the economy was weaker and our future was much less certain, yet, president obama was reelected by a pretty wide margin. If the economy were driving things, i think things would have been different for years ago. Years ago. Four i think there is a normal cycle and politics were after it years, the electorate looks for someone different than the current president and no one could be more different than donald trump, so i think that dynamic is taking place. I do not think it is being driven by what is going on in the currents economy. There have been problems in the economy going back 30 years with wage stagnation and growing inequality, why would this bubble this year as opposed to four years ago when it was weaker . David kit do you, believe the markets are taking into account donald trump . Rogers hypothesis was basically that the markets have yet to take a donald Trump Presidency seriously and that is why we have not seen a reactionk. We are still only on the nomination, so the First Response from someone that myself is, look, if the outcome of this is that the Republican Party is blowing its chance to win the presidency, then how do i track donald trump . Areill have to see where we with the campaign proper, whether it is donald trump against clinton and when that gets going, we start moving in. I think what we are doing in the markets is were looking at this and saying, if there has been an increased in this inequality migrationaction, if and some structural issues have been around for a while, and the policy did not help, if they lead to a political response, then what more can Central Banks do . It plays into the debate about how much more can Central Banks do. Jon i have another rip up the marketsso brazilian rallying as the corruption probe goes on. A big, big move in brazil. I went to get to matt miller. Brazilian markets opened about 20 minutes ago. It has taken a little time to open some of the stocks because of and balances off the charts imbalances off the charts. Up 15 right now, 20 minutes into the day. We saw an incredible move up in in brazilian real, a selloff the bond market, and now we are seeing petrobras up, so it is risk on for sure after then use in brazil. Thisone question for kit, seems counterintuitive. Well, we do market expect the brazilian currency to rally hard up the back of this . Has yes, now that it happened where people have been waiting for this whole thing, waiting for the rousseff indictment and for some way to play out the crisis, the first reaction is predictable. David thank you. S, alan krueger staying with us. Matt lets talk more about currency and the jobs number. Giving us a preview of what Market Reaction we see after this release, lets talk to jeffreys managing director of tha fx business, brad. Read, first of all, what kind of reaction do you expect if we get a number that mrs. I a lot, a number msisses by a lot . Brad that would hurt the market. We have been in a situation with the market feels that again with a positive surprise and some numbers out of the u. S. , a rebounding commodities, a shift back to highyield product and recovery in the s p 500, so things are cruising along at a nice pace. We get a disappointing number and the market might react negatively, however, one thing to watch on this particular report is seasonality. Our economist at jefferies are highlighting the fact that seasonality typically leads to a muted report at this month, so we are at 1625 k for for our 165 k college and the market is looking for something a little sluggish, may be relative to what we have seen in the past, so the reaction to the downside might not be that bad given the momentum it has going to today. Matt may be bad news is bad news here and good news for the dollar, but if we get a strong number, that will solidify our the expectations that federal moves and that could be strong for the dollar because divergences highlighted, right . Brad absolutely. If we get somewhere north of 250 average hourlyn earnings, and if we get something around 0. 34 or 0. 5 like last month, that would be a big surprise and that might force markets to take a look at their said rate hike expectations and reprice them back to higher likelihood of a june or september hike. To the extent that we see that shift for higher likelihood of a that will help the dollar, help risky assets or high data currencies perform well, which had been performing the past couple of days, circuses confirmation that things will continue to the upside in that regard. Matt and maybe get some ships are the pa ships out of state haven. Brad we all expect the ecb and boj will do more. What we got nervous about in january and february is that maybe the fed would have to take back the rate hike and consider negative rates. At the clare getting out of that mindset and back into the, well, the fed will be ok, maybe we will see a hike later this year, maybe two and a cause divergence to come back. Matt thank you. The director of fxs this at jefferies. Muchfirst, thank you very to francine for joining. Francine my guest. Jon thank you. Minutes away from the jobs report. We will be live with bill gross. This is bloomberg i am jonathan ferro. We are 23 seconds away from the payrolls report. The estimate, 195,000 from a previous reading of 151,000. Unemployment survey tuesday at 4. 9 . 2. 5 inHourly Earnings, line with the previous month. Alan krueger will be joining us. Erik schatzker has the news. 242,004 february. A 47,000 increase over the median forecast in our survey of economists. Rate studyyment at 4. 9 . If you include revisions from february and january, job creation is on a 238,000 average monthly pace, matching what we saw in 2015. If you are looking at it against trends, 242,000 is superior to what we have seen as an average. Bottom line, the economy continues to create jobs. The strength in the Labor Department is drawing people into the workforce. The Labor Participation rate is up to 62. 9 . The continuation of a trend. It is now at its highest level since january of 2015. As we have seen, it is a young and yang situation the jobs report. We have that situation here. This report and numbers do create some concern about productivity and the pace of wage growth. Wage growth now at 2. 2 . Saying, economists we surveyed have been looking for 2. 5 . That is the lowest since july of 2015. A worrying sign for the fed and policymakers who are looking for signs of inflation. Average Hourly Earnings fell for the First Time Since december of 2014. Average weekly hours worked dropped to 34. 4. That equals the lowest since february of 2014. Job creation but no Wage Inflation. Those would have to be the bottom lines from this jobs report in washington, d. C. Back to you in new york. Jon thank you. Bill gross will be joining us shortly. Features stayed a little higher futures stayed a little higher. The market trading on the headline jobs figure it seems and not the disappointing wage growth. The dollar a little bit stronger. I want to cross over to Bloomberg Radio. Tom keene and mike mckee standing by with bill gross. Tom we welcome me worldwide. Bill gross with us. We will get to him in a moment. I have to say it is extraordinary report this morning with the revision of a positive 30,000. Mike that is ahead of where people thought we would be. Tom bill gross of Janus Capital joins us. Markets lifting on the move. We are creating moves. Are these good jobs we are creating . Bill that is the question. Are they good jobs . I suspect some of them are not great jobs. Some of them are at minimum wage for a little higher. The average income of American Workers is proceeding higher but not at a rapid pace. In this reportd did not increase. The Participation Rate went up. I think janet yellen and company told be heartened by that, the extent it keeps going up it means more people are coming back into the workforce and takes pressure off of their curve and model. Modelnot exactly a robust from the standpoint of a hike. Fromy be a robust model the standpoint of increasing economic growth. I expect in this quarter to be about 2 . Tom how far away from normal is Janet Yellens fed . Bill i think they are at least 200 basis points higher than normal. Normal is being fought out in academic circles. Most of the research from the San Francisco fred, they say at 0 might be the appropriate rate which would put it at about 1. 5 . The blue dots are significantly higher in the out years. I think the fed still has some rethinking to do. Let me mention a point of that. I think the fed, they are not thinking in numbers, but they want the market to believe hikes might come sooner and faster than expected. That means a positive yield curve. Industry need a positive yield curve to make substantial profits. To the extent those blue dots are higher than what they might really think if they thought about it, that favors thank margins bank margins. I think they are shooting for a positive yield curve as opposed to being practical where the real Interest Rate is going. If you look at the projections the fed made in december for the economy in 2016, we basically hit all those benchmarks. Are they data dependent or not . How is the market supposed to define divine where the fed is going . Bill they are global data dependent. They dont want to admit that. They want to pretend they are the central banker for the United States and world and have global responsibilities because the dollar is the reserve currency. They wont put that in print. To the extent currencies move, to the extent markets have sinkholes on a global basis, to the extent emergingmarket countries do worse or better, the fed takes that into consideration. Data dependency extends beyond the u. S. Economy, although the fed does not want to admit it. Mike are we still worried about the dollar . The dollar has not moved over the last month and a half. The trade weighted dollar index has gone down even with the jobs report, there is barely a move in the dollar index. Is that still a real concern . Bill well, it is a concern because of the lack. There is a six to 12 month lag. We will be seeing the effects of a stronger dollar for at least another six months. The dollar has stopped going up, certainly against many of the emerging market countries. In brazil, it is down by 10 or 15 . It is Getting Better from that standpoint. To the extent the dollar does weaken, that is a benefit for the s p 500 Global Companies that have been affected by the strong dollar in the past and now will see the tailwind Going Forward as we move into 2016. Us if youre just joining on Bloomberg Television and Bloomberg Radio, bill gross of Janus Capital. It was the jobs report. Futures up two, now up 11. We have seen significant yield moves. , january 27. Gh we came down and have come back up. Mckee, the 10 year yield up for basis points at 1. 87 . The proper pricing for bonds for the yield curve given the fact the economy seems to be coming that more strongly but the fed does not seem to be ready to do anything . Bill lets look at this deed of ways. One from the standpoint of what the fed would do over the next 12 months. The market has factored in one hike and then one in the year beyond that. Perhaps that is light. That would suggest perhaps the 10 year is at a low level compared to where it should be. Lets compare it to the global market. That is a key relative measure. Years and 3010 years have gone down in the past four or five weeks. We have to compare the u. S. Treasury 10year to the german 10year and take a spread there. It is not just with the fed might do but the comparison to global markets. Global markets are pulling down u. S. Rates. To the extent mario draghi next week continues to go into negative territory and the moves to which the boj into negative territory, the u. S. Treasury is supported in price and yields are cap to some extent capped to some extent. Tom help me for a moment. Would you explain negative rates and what it means for Janus Capital and your own portfolio . Bill sure. Obviously, you only want to invest in negative rates if you think they are going more negative. We dont really do that because we think the move is limited and you can only go so negative before domestic economies become affected by it and it becomes distracted. What we are trying to do is range bound Central Banks. We believe Central Banks will not move far or fast, that these 50 basis point hikes in the fed and even less in terms of the u. K. And japan and e. C. B. , that it produces a relative stasis. It does not mean rates dont move for basis points on a warning. It does mean it is bound in a range. We sell volatility around that and it produces a much higher yield. Tom we will come back. Jon we will have much more from bill gross on radio and tv. I want to recap what is happening. The number on payrolls at 242,000. That is better than the survey. That is what the market is trading on in the 10 minutes after the jobs release. Yields got higher. The fiveave a look at very quickly. Fiveyear yields also got higher. 10year yields go higher. I want to tell you what is happening in the fx market. It is intuitive. Bureaudollar dropping off a bit. Weaker euro and stronger dollar off the back of this. What i think is interesting is is what ise number driving the market in the 10 minutes after the jobs report. When you go through the jobs report, it is not pretty. Wage growth is disappointing. David that is what i want to talk to alan krueger about. It is a mixed number. Wage growth not there. How can it be if we are close to full employment that there is no pressure on wages . Time, labor has been relatively weak in the u. S. You have those forces working against you. We also have very weak inflation. Growth. Eeing real wage we are seeing reducing power rise. I have to say i am surprised we did not see a pickup in wages. What you and jon said is right. This report is actually disappointing. One of the numbers i look at his total hours worked, aggregate hours. That was down. 4 . In spite of the big jump at the top level, the 242,000 increase, the workweek declined. We saw more people come into the labor force working fewer hours. That could be in ingesting development. There could be more worksharing where peoples work hours declined. Unless we see wages pick up, that means incomes will not be keeping pace. David it has the potential to feed into the story of two americas. People here there is growth and we are in good shape but they are not feeling it because the quality of jobs are deteriorating. They are working fewer hours. Their wages are not going up. It goes into the income inequality issue. Alan i think it does. You cannot make too much out of one report. The general picture is the Macro Economy is getting stronger and more people are getting jobs. That is positive but not sufficient to improve the quality of life for most americans. Jon the jobs number 242,000. Expected 195,000. Average weekly hours worked, 34. 4. Alan krueger says that is lower, disappointing. Average Hourly Earnings 2. 2 , looking for 2. 5 . That is a disappointment. The market is trading on the headline number. More with bill gross and what is happening in these markets next. We have the jobs numbers. We will be talking with the chairman of the council on economic advisors, jason furman, who joins us live next. Look at whatake a markets are doing after the jobs report. There are a couple of interesting things happening. First, you see weakness in the euro and the yen. What the markets are saying, what the markets could be telling you is we got a great headline number. As a result, we expect our virgins to continue because the fed has to move on this and the e. C. B. And boj are in negative territory. Or they are saying we dont care what the fed does. I doubt that is the case. Look at the treasury market. The treasury market is telling you the same thing. Great number. The treasury market likes this. That is why the yield shoots up. People think the fed is going to have to move. The equity market is telling you the opposite or maybe good news is good news for the equity market. If you look at futures, you see we have gains in the futures market. If the stock market expected a gain or a hike from the fed, you would see the opposite. Another sign we are seeing is a big spike and retracement. We are getting back to where we were in futures. You see that if you look at gold or oil. It is an interesting market to follow. David it is going to be an for markets to play out as a practical matter. It will be fascinating to watch. We are going back to tom keene and mike mckee. They are joining us from Bloomberg Radio. They are with Janus Capitals bill gross. In just a moment. 270 something. That is pretty good. You see wages as well. Bloomberg television, Bloomberg Radio worldwide. It is job state it is jobs day. Bill gross with us. Michael, jump in onthejob economy. The research in have seen in the last 15 minutes or so. What is your key insight . Mike i think people are surprised how strong hiring continues to be even we have created so many jobs for so long and the Unemployment Rate is so low. Are the markets going to have a tough time accepting the fact that some point we are going to slow down, but 150,000 jobs would still be a strong month . Bill it would be. Lets face it. The fed is keying in on wages. They focus on labor and labor conditions. To them, if wages get out of hand, inflation will get out of hand. Month, although there may be an aberration, average Hourly Earnings went 2. 5 to 2. 2 on an annual basis. Definitely wages and Hourly Earnings are not out of control. If you factor in productivity, perhaps at 1 . You have inflation in the 1 category. It seems the fed needs to focus on those conditions and know that a 2 inflation rate is perhaps a long way off. And tips market almost worldwide. Lets talk about the u. S. 5, 10, 20, 30 years in maturity, there is a breakeven inflation rate of about 1. 4 . That means the market expects inflation for the next 30 years to be 1. 4 . Why is the fed so concerned about inflation when markets seem to be telling it everything is ok . Mike ordinarily you would say go with the market. But if they are expecting that kind of inflation for 30 years, somebody has to be wrong somewhere. Thinking,y way of when demographics kick in, when the boomers really get old and demand medical care and stop spending money on consumption, things will change dramatically. That means higher inflation. But at the moment, the market does not see it that way. To be fair, for the next five years, inflation seems well under control unless commodities go up. Unless that happens, inflation is contained as we see by the wage numbers today. Tom bill, i want to congratulate you on your latest note on Janus Capital. We always read them. We always like them. There has never been about one. This one is extraordinary anne leeds with the citigroup chart. I am so glad you did this. This one is extraordinary. It leads with the citigroup chart. It is after a 101 reverse split. 500 a share, down to 42 a share. You make it clear you are worried about permanent damage in our American Banking system. Can you support Neel Kashkari in reviewing our too big to fail banks . Bill my point was not neels point, but he has a point. There are banks that are too big to fail. We need to make sure we regulate them property properly and they have sufficient capital. They do have more than they had before. Saidint by showing citi many banks are like that. Not to that extreme. But certainly in europe with Credit Suisse and deutsche bank, their earnings power Going Forward, not the fact they might be vulnerable to bankruptcy because they are recapitalized. The earnings Going Forward are limited because of negative interest and because the yield curve appears to be relatively flat and will continue to be flat for a long time. That means their margins will be limited. It means to me banks are not a bad investment. But they are in a new age with limited ability to increase earnings based upon this that yield curve. Tom Alan Greenspan speaks of this. You speak of this. David pointed out yesterday. Credit growth is ramping up a little bit. Can you buy the idea that is a symbol of a recovering america . Or is credit growth in banking a fiction . Bill i think we need it. I think that is a critical element. Monitors sort of stuck on a hyman minsky sort of model where credit feeds economic growth. Our financebased economy depends on the perpetual creation of more credit. The rate is three to 4 now. Perhaps it goes to 56 . Ofcreate nominal gdp growth war5 , they need to create credit growth much higher than that. Pasts been evident in the 15 years that you need a much higher rate of credit growth to stimulate a certain amount of nominal gdp growth. It is Getting Better but still in the 4 area. As long as it stays there, it is underneath the cost of capital at about 6 . If you can only grow nominal gdp credit by 4 with the cost of capital at 6 , nominal gdp suffers and you cannot get out of the hole. Credit growth is the key. You have to find some way for the private system to generate it. The fed has done their duty in terms of lowering Interest Rates and queuing all of that. Now the private system needs to take the bait. Some of it is occurring. I think they need much more. Mike can it be created . You argue in your latest note we are seeing push back to the idea of ongoing credit creation. It sounds a lot like what ray dalia has been saying, that we are at the end of a longterm credit cycle. Are you saying you are in agreement with that . Bill i think we are and i think we have been there in marginal terms for the past several years. Give me 30 seconds. I look at this as a monopoly game. You know what happens in monopoly. You get a certain amount of money. You buy properties. You get 200 every time you pass go. Look at that in terms of credit creation in the system. Players go bankrupt because they have so Many Properties and not enough cash. They only get 200 as they go around the board. It is not enough credit created. What the fed has to do is 500, 600 every time you pass go to keep the system solvent and key players playing the game. Thate moment, the ideas have come about in terms of negative Interest Rates and qe, it is now being advanced in terms of helicopter money dropping cash. There are a number of ways to do it. The private system needs more. Jon 26 minutes after the payrolls report, a decent beat on the payroll number. 242,000 jobs added in january. Elsewhere, it is a mixed report. We break it all down after this short break. Alan krueger will be sticking with us. Coming up, fresh reaction from the white house on the jobs report. The chairman from the council of economic advisors, jason furman, will be joining us. Jon a mixed payrolls report. U. S. Payrolls surged in february but a surprise drop in wages. The shanghai composite seasons best week for the year as chinas political leaders meet to approve the fiveyear map. Of theraid the home former president fueling speculation his successor is closer to impeachment. Jon welcome to bloomberg one direction or the other depending on the asset and then a reversal. Unfortunately for me because i bet john farrell the euro would move down. As you will see later, currently up. David i think it was dinner. Jon it has become dinner. Matt check out the features. The oneday chart, you will see what i mean. Futures initially reacted which is surprising if you take this jobs number as a positive report. Because then you would think the fed has more ammunition to raise rates. Typically, equity markets dont like that. Maybe they started reading about the Hourly Earnings or drop in wages and said i guess the fed is not going to raise. And now features have come down to unchanged. It will be the same across the board. Lets look at the treasury markets and see. How the 10year reacted. Initially, a spike, and now a drop in rates. The shorter end of the car tends curve tends to be more sensitive to fed movement so you will see a more dramatic move in the twoyear. We had a big jump initially and now we are back down. People are buying into the shorter into the curve now. That is important to note. Look at the euro. It looks like im going to owe jon ferro lunch or dinner because we were testing the dollar at nine at one point. And now we are above 1. 10. Jon it looks like im the guy that moves starlings to dollars, so im not the greatest ethics ethics fx trader. Report, we got a storm and im sure how he viewed this report. I dont lee jeffreys things wages are more of a problem. You will see a chance for some strength to come out of the yen. Lets look at the yen. It has been on a tear this year. Right now, we see the yen gaining against the dollar. You could at one point by ¥114 for your dollar. Now it is 113 yen for your dollar. All the commodities will look the same. Ofant to bring up my chart the labor force Participation Rate this is one of the things the bears crow about. The Labor Participation rate has come down. We have seen it since the Third Quarter of 2015 going back up. Alan istion is, and wonder if you heard earlier, boomerscribes the baby as the pig and the python because it is this massive demographic of people. As they retire, it has been a problem for labor force for dissipation. Do you think we have bottomed and are turning around . Alan i would be surprised. I think we are going to stabilize. I think we will continue to see Older Workers retire. That will drive the dynamics Going Forward. We might have some people on the sidelines that will come back. As we look over the last 12 months, it has been relatively flat. If you look at the details in todays report, the growth in Labor Force Participation was mostly parttime workers. That is something we might see Going Forward with an older workforce and workers who have household responsibilities. They will come back and work parttime. The big growth in employment according to the Household Survey was people were voluntarily working parttime. Parttime for economic reasons big people wanted to work fulltime. It was flat. It is possible we will see a rise if we have more flexibility in work hours print but i suspect we will stabilize over the next year or two. People are buying the short end of the curve pushing yields down. Futures are pretty much unchanged. Lets go over to first word news. Here is julie hyman. Julie equity futures rising as much as 6 in brazil after Police Detained the former president in a corruption probe. He is the highest profile figure targeted so far in the investigation which is known as carwash. That revised speculation the scandal could ring down the current president. Prosecutors say there is currently no investigation. Several top officials of the party have been arrested. The pace of chinas military spending growth will decrease to between 7 and 8 this year. That is the smallest since 2010. The estimate was released before the start of tomorrows nationals peoples congress. Interview plans to clintons former aides in coming weeks. Investigators are trying to find out if her use of a private email server compromised information. Bloomberg news, i am julie hyman. I should ask where you have been but will give you a chance to catch up on payrolls. The survey was 195. The Participation Rate goes up to 62. 9 from 62. 7 . That is also positive. Unemployment stays at 4. 9 . The word you will hear a lot through the day is mixed. Average hours worked, a little lower. Figure notn month great either. To break this down, we need a few people. We have erik schatzker. In the studio, princeton professor alan krueger. And joining us for the hour, Oppenheimer Funds chief investor Krishna Memani. Erik, the Market Reaction initially was to sell treasuries to buy the dollar. That was trading on the headline number. It is so mixed. Andave been in unwind unwind in the last 40 minutes. Go through the payrolls report. What are you looking at specifically . Erik i want to help you understand why the proper way to look at it is as mixed. If you look at the jobs created in february, we see a disturbing trend. Those are lowquality jobs. We are talking about retail for example. Leisure and hospitality and education and health care. Education and Health Care May sound like a highquality industry. But from an earning standpoint, it is on a relative basis a lowquality industry. Average Hourly Earnings in education and health care, we are talking about almost 840 a week Weekly Earnings. Against an average of 872. Retail, 553. Leisure and hospitality, 380 a week against the National Average of 872. If you look at the industries where jobs are being destroyed, mining, which is dominated by oil and grass extraction and oilfield services, as well as manufacturing. Those are highquality jobs. Those are industries were average Weekly Earnings are well above the National Average. In the case of mining, predominantly oil and gas, we are talking about 1350 a week against the National Average of 872. That is why i am saying lowquality. Job destruction in industries where earnings are high. Job creation in industries where earnings are low. David alan krueger, is this really a secular change in the u. S. Job market . Do we need to get used to this phenomenon of lower quality jobs . Alan this trend has been taking place the last two decades, polarization in the job market. One month does not change that picture that much. In the near term what is most important is we raise wages for jobs we already have. The flow is not going to affect the average much. There are over 100 million jobs already. The 242,000 added are a small apartment comes to overall average earnings. That said, i think we need work on both margins. We need a strategy to strengthen manufacturing and have more innovation in the sector. We have seen some stabilization in growth in manufacturing after years of downward decline. But it is not enough to accommodate the workers that go into the sector. In the near term, i think we need to work on raising wages for jobs already there. That will have the biggest impact. David there is nothing in the numbers encouraging for manufacturing. Alan not this month. The month before was storm. Initiallyuries sounding off and then shortening. At this point, we can argue whether this is a timing cycle. You would expect the jobs growth to mature and wage growth to increase. This jobs report does not spell that out to me. Krishna the right characterization is that it is mixed. In terms of the implication for the market, you want to conclude what the fed will do office jobs report. On that front, the data is not Strong Enough one way or the other to get you to a conclusion. If you thought the fed was on hold, you can still make a case the fed is on hold. If you wanted the fed to tighten, you can make a case the fed tightened. We were looking for this report to break one way or the other because of weakness in the services sector, but it did not. As a result, i dont think it changes the direction of the markets meaningfully. David i have been watching the wrip function. It has been fascinating. After the announcement, it jumped to 75 . Now it has settled back down to around 65 . It is clear the market reacted and then started having second thoughts. Erik david, everybody is trying to get a sense of how this plays out on the feds dashboard. Argue for another rate hike, whether 25 basis points in a couple of weeks or maybe at the next fed meeting when you see wage growth of only 2. 2 slipping from 2. 5 in january. Yesterday, i spoke to ray dalia. Ra there are people hike,el as though another even if it is as small as 25 basis points would be a serious mistake. If anything, the fed needs to get on the easing past, not just holding rate study where they are but cutting rates back to zero effectively and embarking on another round of quantitative easing. Rate is participation increasing. That is good news. Looking at wages and headline payrolls, theres still a lot of slack in this labor market. How would you push back against that . The biggest measure is the lowest it has been since before the recession. 4. 9 nemployment rate of held steady. One month does not a new trend make. The month before, we saw. 5 wage growth. I think one would want a full or picture. The fed needs to take into account inflation. Are starting to see core inflation rise a little bit. The breakeven point has been rising a little bit although still quite low 10 years out. I think theres something in todays report for the hawks and doves. Todays report was never going to be definitive. But i think it has not provided much clarity. David as an investor, where do you come out . Krishna i am made of. I am a dove. I am with ray dalio. I think this will be one and done. The key point is looking at the u. S. Employment data as a driver of fed decisions. It may have been true in previous cycles, but it is not. I think that is the point they were making. We know u. S. Data is ok. We know u. S. Inflation is ok. Now what we are worried about is what is happening overseas, international, global. When you think about it that way, the data here would have to be overwhelmingly positive for them to punt on that. I dont think it was that today. David this has been a theme throughout the program. It is fine to talk about international, for the statutory mandate for the fed is domestic inflation and employment. We worry about international only as it affects domestically what is going on. Is anything in the numbers to suggest we are suffering because of china or europe or emerging markets . Erik certainly, the drop in manufacturing may play into that a little bit. I would say one thing to add to the point you were making. I would also say i would defer to alan and krishna on how much the fed has to look at the domestic economy versus the international economy. It appears based on what weve heard out of the central bank that the fed has tilted more to the Global Economic backdrop since the arrival of stan fisher. You do hear things from fisher that acknowledge the fed is paying closer attention to the Global Economy because it is feeding into the pace of domestic economic growth. The strength of the dollar matters and the impact on commodity prices. Jon erik picks up the most important data point. It is the markets. That is what has driven expectations over the past few months. We have upside surprises in the United States. What you also see is improvement in u. S. Financial conditions on this chart as well. That is the white line i believe. You see both going up in tandem. You see how much they came down over the last three months. It is not the recovery that matters for the fed now. It is that decline over the last three months and whether that continues in 2016. Krishna if you take a step back, what happened in the markets in credit and equity markets over the last six months is very scary for the fact. What they dont want to do is do something to contain inflation and get us to a recession. While the Financial Conditions Index has eased or improved, i dont think we are out of the woods by any measure. Look at how far credit spreads are today. I think there is still substantial risk in the marketplace and the fed will incorporate that in their thinking unless the u. S. Data becomes overwhelming, the likelihood they tighten is small. If they do, i think we will be dealing with the same conditions over and over again. I think that is the challenge. Jon if you want to access that that online. N find david this is a terrific discussion. Erik schatzker, thanks for joining us. Alan krueger and Krishna Memani, thank you. There is much more ahead on bloomberg user, jason furman joins from the white house with his reaction to the latest jobs report. I am julie hyman with the Bloomberg Business flash. The first story has to do with exxon mobil. It has become the first u. S. Oil company to ship crewed overseas. It shipped oil to a refinery in sicily. Ban on u. S. Oil exports was ended in december. Since then, independent traders have taken the lead exporting american oil. Facebook is taking steps that will raise its british tax bill by millions of dollars. The social network will quit routing Advertising Sales of its largest u. K. Clients to ireland. It was criticized when it was revealed in 2014, the company paid a little more than 6,000 in taxes. Meg whitman has reassured invest ors skeptical of her move to break up hewlettpackard. Hewlettpackard enterprises forecast that may Beat Estimates. H. P. Enterprise targets corporate customers with hightech gear. For more premarket movers, lets go over to matt. Matt i want to kick off with crude. The correlation has been so strong. We still see crewed up 1 . I want to remind you of that when you are looking at futures and wondering why we are reacting that way to the jobs number. Lets look at the movers. Beat in the quarter but the less the fullyear outlook is less than the market was looking for. The concern is they are so tightly linked to gopro sales which have come down that they are not going to see growth. These often move in tandem as they are in the premarket. Estimatessson beating for the reporting quarter and full year by a lot, 209 as far as sales are concerned. Smith wesson rising another 5 in the premarket. It has been a strong stock up 535 over the last five years. Lets look at other stocks we are following. We are going to take a break. We will come back and i will give you the rest of the movers. On Bloomberg David this is bloomberg i am david westin. With us is Krishna Memani. Lets talk about your recent note. He singled out financials. Bill gross said there like utilities. We have seen layoffs at bank of america, goldman sachs. You think it is an Investment Opportunity . Krishna i think so very much because if you look at the selloff and financials, it was driven by two things. One, concern about credit markets. We were going into a recession so credit losses were going to increase. That clearly is not panning out. Credit markets are rallying. Secondly, the fear of negative Interest Rates in europe and the u. S. With the jobs report and economy stabilizing and the Employment Situation and credit spreads coming back, it seems that is not going to happen. If you look at book values of lots of these entities, they are at a steep discount. They may be utilities, but utilities dont have to trade at 50 of book. David what about the regulatory overhang . Neel kashkari said we need to break them up. Krishna regulatory overhang has been with banks for a long time. That is nothing new. They are adjusting their business models. Im not suggesting they will be making a return on equity of 20 . But if they make a return of 10 and markets believe that, financials have a lot of upside. Jon do you want to play the equity or debt . Krishna i think you can play both. The case for equity is based on valuation. Actuallyfor credit is really more about what happens with bailins and things like that. Easier for equities i think. Jon Krishna Memani stays with us. We break down the jobs report with jason furman, chairman of the council of economic advisors, who joins us from the white house with his reaction to the labor Market Report. Futures a little bit higher. Dow futures around 30 points. S p 500 futures higher by three points. Payrolls 242,000. But a mixed payrolls report. We will dig into the labor Market Report in a couple of minutes. Hey hows it going, hotcakes . Hotcakes. This place has hotcakes. So why arent they selling like hotcakes . With comcast Business Internet and wifi pro, they could be. Just add a customized message to your wifi pro splash page and youll reach your customers where their eyes are already on their devices. Order up. Its more than just wifi, it can help grow your business. You dont see that every day. Introducing wifi pro, wifi that helps grow your business. Comcast business. Built for business. We are about 25 seconds away from the open. Still with us, Krishna Memani. Across assets very quickly. Beaten on the headline number. Next is very much the worst. A weekly euro on the back of a stronger dollar. Now a stronger euro. The headline number, with the quality of jobs not great. David equity markets are working properly. Does this mean there will be more earnings down the pike were not . Thats ultimately what matters. Newss . A good news, bad krishna the driver of a lot of things in the market place is a couple of things. What happens in china and what the fed does. It basically comes down to what the fed is going to do. Nolong as there is conclusive evidence to move the markets one way or another, that is what we will be doing. Matt we had an Hourly Earnings number that was not so great news. Equity markets are responding positively to whatever they are pulling out of that. Very little changed here. The gain in the dow only 20. Futures spiked up and came back down. Of gain wethe kind would see four minutes after the report. On thelook at w. A. R. P bloomberg, and keep in mind this is 10 minutes delayed, initially 75 , probablyo here for the december meeting, down to 67 . We will get an Interest Rate hike and a 0 chance of a cut in in a meeting through the beginning of 2017. Do you agree . Krishna maybe. Cutting would require a lot. T cutting would we be would be drastic. We saw a spike up in yields across the curve, still up three basis points. As far as the euro, which is most important to my wallet to oh johnause i would lunch, we see euro strengths. He buys lunch with euro strength. I still basically oh john one salad. Jon that lunch became dinner quickly. Oil continues its rally here. Three weeks in a row is a gain for oil. Right now at 3585, every time a antract rolls over we see reset of the price, which is why we dont see a big price there. Gold is an interesting trade. You see a 1 to gain their. Is it a fear trade . You have to decide what it is. People buying gold think there is so much volatility. I didnt have it loaded up properly. It is a small stock, but it is interesting. Its grip. Htening and amc is china. Big chinese investment. This is what i do with my leisure time. Abigail doolittle live in the nasdaq. Abigail if the nasdaq does advance it would be a fourday winning streak to see how the day plays out with the nasdaq, flirting between red and green. We have another retail miss shares as the company is down. They also said sales for this Fourth Quarter it is a secular sales declined that say theg analysts proposed merger between staples and office depot is so critical, they are waiting for regulatory approval. It is that waiting period for that approval. Could help explain why the stock is down 40 over the last year. Jason, let me give you the reaction from us here on the set. Initials saw that number and we thought oh my goodness. It became more nuanced. Is that your reaction . Like any report you need to look and it you need to look in the full context of what we have seen recently. The Unemployment Rate has come down to 4. 9 and state there. But the broad measure came down 2 10 this month. The Participation Rate came up to tenths. The trendso part of we have been seeing in the last five months. Presumably what you are referring to his wages. January we had unusually high wages. Average over the two months, we are seeing the 2 weight growth have seen in the last year. Not enough but not some new piece of information either. I was referring to wages. Clearly people are working for less money. Inre is actually a reduction some wages and a reduction in the average hours worked per week. That cannot be welcome news at the white house. You want to look at trends. When you see that has happened month after month after month for the last several months, that tells you something. Wages were up a lot in january, down in february. The right way to look at that is the average. That came outata in january that shows you wages across the income distribution. And the fast as have been the workers at the 10th percentile. Gains have been workers at the 90th percentile. Thingst to look at these over a longer period, not just bounce up and down. Normal wage growth matters, the nominal number matters in precrisis was pushing 4 . 2 you told my mom she got a wage growth she is not going to go out and spend. 2 is nothing. Why is that good as far as you are concerned . It is definitely not good enough. The important conversation to have is what can we do to make whether it is expanding trade or raising the minimum wage. I absolutely agree we need to do more. Been faster than it has been and it is relevant that the price of gasoline has fallen a lot so peoples purchasing power is up. Seeing why we are Consumer Spending as well. How confident are you in the numbers themselves . People, and our program regularly and want to question the numbers. Look atld really payroll withholding tax numbers, which are not as encouraging as the overall employment numbers. Are the goldese standard economic data, especially the Establishment Survey. January we saw a big gain in manufacturing jobs. Right way to think about that is probably averaging over those two months. It ist the last two years the fastest job growth since the 1990s. You dont want to take any one data point to seriously. Look at the trend and the trend is clear. We have a labor market increasingly healthy. We were down this month, up a lot in january. Was a small positive for manufacturing, which is what we have seen. Global growth is the slowest it has been since 2009. We also need them to cut the tariffs. Tpp lookhy we need done as quickly as possible. Jon thank you for it thank you for joining this program. Will look at up we why china is intervening in the stock market. Our new green room. Later today Bloomberg Politics managing editor will speak with mitt romney at 1 30 p. M. Eastern on bloomberg tv and radio. This is the Bloomberg Business flash. It was a mixed jobs report for february, employers added 240,000 jobs. Hourly wages unexpectedly fell in the first month of decline in more than a year. A strongering that labor market would lead to better paychecks. The fed will try to limit business ties between wall streets biggest banks. It is set to reproposed rules in meetings in washington. The fed wants to make sure if one of the megabanks fails the others will not go down two. Riches man in china is also creating the largest chain of movie heaters. Amc has agreed to by the cinemas for 1. 3 million in cash. The deal would combine the second and fourth largest Movie Theater chains in the United States. U. S. Payrolls and focus but the big story will be china. The news today from china, intervention to support the stock market, helping the benchmark index cap reach its best weekly game. Joining us now still with us with oppenheimer from Oppenheimer Funds. The funds Protection Team came out in full force. They are going to want to emphasize stability. These tend to be fairly choreographed. They obviously havent confirmed it. They went to a state enterprise and said by largecap stocks. To figure out what is going on off of the chinese equity markets is kind of a lost cause. We have all given up. Some indications from an Economic Activity teedo we can. Ap we can gather the news on both of those is actually quite good. They have made really good commit since that they are not and presumably the Global Equity markets. A lot of people call it the pick a number, any number convention. Seriously, do you focus on that . About the veracity of the gdp numbers, most people say directionally them numbers gdp has a unique problem. Other indicators are seen as more or less credible. Open. L also keep our ears a week from today governor joe will give a press conference. It can be freewheeling. More important is how they plan on getting there. Particularly in china for consumers. What are you looking for on that front . Deficit will be increased, that means some targeted fiscal stimulus measures. Been holdinghas the macro picture in china opening up. In 2008 whenike they arguably save world demand. The premier will outline that. Channel, we have set the chinese have pledged not to devalue the currency. Go back to switzerland a couple of januarys ago. I remember it is a pillar of Monetary Policy. The situation is slightly different in switzerland. For political reasons more than anything else, they are not going to devalue their currency. Believee anything out from any developing markets. Raided fueling speculation that support will go to impeach his successor. Leading world gains and hitting its strongest level since august 31. What do you think the us it puts hers . In a tough place. He hasnt Held Elected Office she was his chief of staff. Working Party Politics has been held off for questioning and detained, political earthquake in brazil. That probably changes now. Feds talk about what the are doing, typically the next leg of the conversation would have gone every way you look , ath africa over in turkey complex situation. A key driver. I think the key driver is really valuations. Brazil has been rallying for quite some time. We are recovering from that. In somecation we get point that there will be clarity in respect to politics and policy reacts favorably to that. It is so counterintuitive. It reads the former president could be potentially detained by the police. Yet the market rallies. A lot of people waiting for the endgame. Are we getting toward the endgame . That is tough. We have wrestled with the americas in latin created is this a political crisis with an economic undertone or an economic crisis with a political undertone . 20 her termn ends in 2018. We still have a big period to go until anything becomes clear. Get through the politics, they have underlying challenges in their economy. Its not like it was going just fine. Thing,ndamentals is one valuations is the other. I think were coming back from that. ,e still have a credit overhang inflationary overhang, and that will be done in due course. That is what the markets are going to react to. David the secondlargest economy in the hemisphere. They have consumers, manufacturing. Its central bank has kept Interest Rates dramatically high. Krishna memani and dan maes, thank you for joining us today. Coming up is vonnie quinn. Everyone wants to talk about house of cards but we do have a couple other things. Bunny manager a money manager returning an average of 10 over the last 15 years with his behavioral funds. It is based on a strategy isated by Richard Saylor and attracting a lot of money. Program,t on this highlights of the past three hours and this weeks show all together when we wrap up the job report. U. S. Equities just turning lower down a 10th of 1 . Now look now a look at this weeks conversations. It is time to look at these bargains and the rings we are looking at are those strong consumer oriented companies. Companies that are growing their market shares as a result of the services. We are going to have to move the making of purchases that put money in the hands of spenders. The linkage between money in the Financial Assets and having spending is weaker and weaker. Month old son knows the answer. Some of them were at minimum wage and a little bit higher. And the average income of American Workers is perceiving higher, but not at a rapid pace. The break even inflation rate is 1. 4 percent, which the market expects inflation for the next 30 years. So concernedis about inflation when the markets seem to be telling us that everything is ok. What a morning. Withsion high, matt miller the dollar at 1 10. That does it for us. Do not miss it on bloomberg tv and radio. Best of luck for the rest of your day. 3 p. M. In london and 11 p. M. In hong kong. I am vonnie quinn in for betty liu. This is Bloomberg Markets on Bloomberg Television. Vonnie were going to take you to sanw york to london francisco. The eagerly awaited u. S. Jobs report is out. Stocks arein u. S. Fluctuating on the news it will lead to this months crucial meeting. Takes from other candidates. Of our interview with mitt romney, who says trump isnt fit to be president. And why facebook is changing its tax strategy