We are waiting for a 10 45 press meeting with the signatory of state the secretary of state. Guy that is going to be fascinating. We have an emergency meeting of european Foreign Ministers as well today, but that story in washington is one to watch. Im sure the crude market will be. European stocks up a little bit today. We saw a little bit of action around the payrolls number, but not much. Saw our way back from earlier highs. The dollar continues to push on up. I am going to show you some charts later on talking about some of the Technical Levels the. Ollar is facing now to the upside. 1. 11 now. A little bit of movement in the bond market. We are looking for next weekend the signing of the phase one trade deal. How good could that be for europe, and what is already priced in . Vonnie sticking with jobs, the u. S. Labor market closed the year with a little less momentum. Nonfarm payrolls rising hundred 45,000, compared with a median estimate higher than that. Unemployment held steady at a 50 year low. Average Hourly Earnings climbed below average as well. We are joined by Tiffany Wilding, pimco chief u. S. Economist, from newport beach, california. I am curious as to how you characterize this jobs report. It would seem to be that depending on your view of Monetary Policy, this was either a fine report, or showing some danger signals. Tiffany thanks for having me, vonnie. I agree with your characterization that this report was mixed. Ou know, i think the 145,000 total payrolls gained was a little weaker than consensus, but there are probably some quirks with the data because of how the thanksgiving l on the calendar this year. We are more focus how thanksgiving fell on the calendar this year. We are more focused on the aggregate numbers this report, and they looked quite a bit weaker than they did in november. You had some weakness there, and in addition, you had some downward revisions. Aggregate hours growth now looks like it is running at below 1 , versus november when it was at 1. 5 . This report suggests that u. S. Growth is slowing, and it does continue to slow. Aggregate hours growth is a Building Block of broader gdp growth because it is really about how many hours we work as an economy and how productive we are. Vonnie something this morning it is the perfect employment report for the fed to continue to run hot. Do you agree . Tiffany yeah, you are also looking at the wage growth. Average Hourly Earnings growth on a yearbyyear basis peaked earlier in 2019, and now it is down to 2. 9 . I think what is happening here is as you have Profit Growth that is decelerating, corporates are cutting back on investment, but they are also cutting back on labor costs. They are not necessarily pushing the brakes on the pace of hiring, but they are cutting back hours and holding back on wage increases. I think we are seeing that in average Hourly Earnings. That gives the fed more runway. Certainly, the argument for hiking rates because of inflationary pressures just isnt there right now. Vonnie what are the arguments guy one of the argument ahead of the earnings season was we could see margins coming under pressure because of input costs, particularly wages. Is todays report good news for Corporate America on that front . Tiffany it does look like ultimately, at least from this one report, it does look like that. But that is something that ultimately will be focused on because what we call labor input costs, they had been rising earlier this year, and that had been an important part on why margins were declining. Going forward, but you would expect to see is as Profit Growth decelerates with a lag, that does affect the labor and the labor costs in aggregate Income Growth that corporations are paying out. Guy if the fed cant encourage wages to go higher, does it react with further cuts . Tiffany i think ultimately, the bar for Interest Rate cuts is higher at the moment then the bar for hikes. That is the result of, as we mentioned before, the fact that we are not seeing a lot of inflationary pressures. Wages, outside of goods, i would actually say theres a lot of global deflationary pressures for goods. We could also see tariffs drop, etc. , which is also disinflationary in the near term if that happens, although probably good news for the broader economy. Lack ofof the inflationary pressures, what you have to think about is growth and the distribution of risks around growth. They say risks to the downside. A Material Change in gross, they will cut the outlook again. A steady funds rate throughout this year, we think the risks to cut our maybe a little higher now relative to the risks of hikes. Vonnie if we get negotiations rolling over in a phase two china trade talk happening, and the market continues to be volatile around that, and companies are then beginning to be uncertain again, does that change the picture of what we saw today for the u. S. Economy . Tiffany i think it absolutely does. One of the things that could cause the phase two negotiations to fall apart is really what larry kudlow mentioned earlier on your program. A phase one agreement isnt really being lived up to, so there are various things under that agreement. I think the clearest thing in terms of Economic Impact is the fact that china has agreed to purchase 200 billion dollars additional u. S. Exports over the next couple of years. We think that could add to growth if they do live up to that. Not very much. Maybe Something Like 0. 2 percent, but it would certainly help the Manufacturing Sector somewhat, which has been weak over the past year or so. If they are not living up to those purchases, that certainly could reduce growth expectations just because you are not seeing those additional exports. But i think overall, higher business uncertainty, the question is also what the u. S. Administration does if china is not living up to those phase one deal agreements. Do we raise tariffs further . Obviously that has created a lot of uncertainty in the past. We see the direct cost of that also bearing on corporate margins. , youf those things obviously create some damage for the u. S. Economy. Vonnie Tiffany Wilding stays with us. She is pimcos chief u. S. Economist. First, lets check on the bloomberg first word news with ritika gupta. Ritika this flash of light is adding to evidence about the final moments of that ukrainian jetline in iran. The New York Times says the video shows an antiaircraft missile hitting the plane. Bloomberg has learned that two surface to air missile launches were detected by u. S. Spy satellite. They were said to have come from navy airport moments after the plane debarked. Iran says it is one big lie. Iraq is moving forward with demands for u. S. Troops to leave, asking the state department to decide the mechanism for American Forces to leave. Iraqi lawmakers called for u. S. Soldiers to leave after a u. S. Air strike killed a top iranian general. The u. S. Army plans to expand its cyber effort in china to counter china. A specialized unit will be deployed to the pacific, capable of conducting information, electronic, and cyber missile operations against beijing. The army will outline its plans today. And a happy birthday to kim jongun from President Trump. The president asked south korea to deliver the message to kim. His birthday was wednesday. It is the latest exchanges of personal greetings between the leaders of two countries that have been adversaries for decades. Global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. Im ritika gupta. This is bloomberg. Guy thank you very much indeed. Still ahead this hour, u. S. Secretary of state mike pompeo, treasury secretary Steve Mnuchin expect it to hold a press briefing around 10 45 eastern, 3 45 gmt. We are anticipating this relates to further sanctions when it comes to iran. Full coverage coming up. This is bloomberg. Vonnie live from new york, im vonnie quinn. Guy from london, im guy johnson. This is bloomberg markets. Lets check in with Abigail Doolittle and find out what is going on with those markets. Abigail very small moved to the upside post the nonfarm payrolls report. A bit disappointing, but some may say its goldilocks. The s p 500 up 0. 2 . Crossingmoments ago above the 29,000 mark for the first time, now retreating slightly below it. It will be interesting to see what happens as friday progresses. In the u. K. And europe, we also have small gains at this point. The ftse 100 and the stoxx 600 up marginally. This comes on a below average time for the s p 500. We see it is below the 20 Day Moving Average at this point by about wealth percent, so we have these very small gains here in the u. S. On below average volume. Where we have more action for the health care sector, if you take a look at the s p 500 health index, it is up 18 points over the last year. , starting out with shares of their nejra of lilly. On a buy from Eli Eli Lilly making a bid for the skin drug company. That stock already up 83 this year. Shareholders will receive up to 93 per share in cash. Received a bid from a nonprivate equity firm. Finally, take a look at Portola Pharmaceuticals come up plunging 43 . They put in a bearish renouncement to the downside. Lots of targets on the street cut those plunging. Guy guy thank you very much indeed. We are back with Tiffany Wilding come up cochief u. S. Economist, joining us from new beach, california Tiffany Wilding, pimco chief u. S. Economist, joining us from new beach, california. Can this number goes ken lay lower . If it does go significantly lower . If it does, is that a point where the phillips curve finally starts to work . Tiffany i think that is the billiondollar question we have seen in the cycle. How many can we draw back to the labor market with tight conditions . What we have seen over the last several years is that prime age folks, and in particular women come i have come back to the labor market in full force. That was definitely the case in todays labor market, and we saw that was some of the broader indices. Prime age men have also come back, but not as strongly. I think there is a question around how much more Participation Rate improvement or improvement of some of these other marginal areas of the labor market can happen, to your point, before we start seeing more material wage inflation. I think that is some thing we are going to have to continue, and the Federal Reserve has said they will have to continue to probe. Lets see how money people can come back to the labor market. We are not seeing any, or we are seeing very little evidence of a wage inflationary pressure. On the aggregate level, average Hourly Earnings growth actually appears to have peaked in 2019 and is now down to 2. 9 . Even if you look in the details of the data where we were seeing the phillips curve affect, looking at local areas with even tighter labor Market Conditions where inflation was rising a little bit faster, we are not seeing a huge pickup there, and we think ultimately, if you get inflation picking up, we will see indications of that in the details of the data, so the fed will have time to react to it. But right now, we are not really seeing it. Guy ok. Manufacturing transport. We saw jobs lost their. Retail, health care, leisure. That is where the jobs were created. The retail story is probably to do with thanksgiving, but lets focus on the other side. Do you have any anticipation that we are stabilizing when it comes to the industrial side of the economy . Is there any expectation that we start to see jobs picking back up again in that sector . Tiffany i thing more broadly, the industrial and manufacturing side of the u. S. Economy follows global trends. Weve found that it follows with a bit of a lag, which is why we have said in our outlook more broadly that u. S. Growth, which has lagged global cycle, will probably lag a bit in the rebound that we see in 2020. We have already seen some stabilization in measures of industrial output and pmis, but that has not been the case yet in the u. S. We think u. S. Industrial production may slow a little bit more. In the first quarter, you are also going to have idiosyncratic issues around the boeing production. That is also going to make that look very weak. We think that bounces back. But outside those issues, Industrial Production can decline a bit more before it really starts to get a floor and rebound because it has lagged the global cycle. Again, global Industrial Production does look like there are tentative signs of stabilization, so we think it rebounds in the second half of 2020, but that rebound is not going to be like what we saw in 20, where in 2017, where we saw a synchronized move in global measures. Vonnie does the fed come up with something midyear that changes the dynamics in terms of Monetary Policy . Tiffany i think that is a really good question. The fed is doing a review of Monetary Policy. The catalyst to that review had been the fact that the realization that the real neutral Interest Rate is low. Theres some indication may be that Inflation Expectations are slipping somewhat because we had another year basically below trend or below target inflation for the fed. I think the fed has realized that they need to do something. There needs to be some tweaks around their Monetary Policy framework. I think the real question there tweaks for the Monetary Policy framework when we run into the session, at the fed has and what the fed will do . They have promised they will wait to raise Interest Rates until we get a period of inflation, but in the current environment before a recession, we are willing to rent inflation run a little bit higher here. We think Interest Rates are slightly accommodative now, so is the fed really going to hold off for quite a while in any sort of hiking absent a recession to really let the economy run hot . I think that is going to be something we are looking for when that comes out. We think they certainly will strengthen the language around the inflation target in that it is asymmetric and they are willing to let some above target inflation happen. Vonnie thank you. We have to leave it there. That is Tiffany Wilding, pimco chief u. S. Economist. If you have a bloomberg terminal, check out tv. You can watch online, check out charts, graphics, even interact with us. This is bloomberg. Guy from london, im guy johnson. Vonnie from new york, im vonnie quinn. This is bloomberg markets. In a world shifting towards passive investing, one active manager is thriving. They beat the s p for the Third Straight year. Here with more is at the not his here withhat is psarofagis. Anasios tell us a little about what is going on. Athanasios really why it is done so well is its performance. It has beaten s p for the Third Straight year. Well,is fund has done so it is very High Conviction fund. The fund manager has been really good at picking this names, but also she is really big on transparency. All her research is posted on twitter. She uses a lot of crowdsourcing to get her research. It has just been doing really well. Guy talk to me about the names that are being looked at here and the timing around them. Athanasios the big name is tesla. If you look throughout the whole year, shes gotten a lot of scrutiny on her calls. She put a price target a while at 4000, but it actually nailed tesla before the pop in october, and that has been the main driver for its performance. But it is not just tesla. It is a very high concentrated portfolio, but a good chunk of 100 . Ave been up over her stockpicking abilities have been really good this year. Vonnie is this proof that there is some faith in active management . Athanasios i think it does. Next year will be really big for active, i think. You have active nontransparent etfs. If i was an active manager, i would be happy you are seeing an active etf getting positive light and showing that there are some spaces in equities. I would be glad that there is some positive news on etfs. Vonnie thank you. Psarogais ofasios bloomberg intelligence. Guy lets kick things off. A boeing pilot said the 737 max was designed by clowns who were monkeys. By that was one of the very negative comment in a batch of internal messages boeing has released. The Company Employees discussed their deep unease with the plane and the flight simulators that were being used to train pilots. Shares of six flags have fallen as much as 19 , the worst loss ever. The company says troubles with will her theme parks revenues and could lead to a number of projects being canceled. Chinese develop men partner has defaulted on payments. That is your Bloomberg Business flash. Still ahead, is the usa for after the killing of irans soleimani . The former u. S. Undersecretary of defense policy looking to enter that on tonights debut of wall street week, 6 00 p. M. In new york. We will have a sneak preview. And of course, we are awaiting that briefing from the white house on iran. That is coming up as well. Those are live pictures. This is bloomberg. Vonnie live from new york, im vonnie quinn. Gu