Countdown to the jobs report.
Morton zuckerman, mohamed el- erian, and scott ritual put jobs in focus.
Bouncing back from the bailout, earnings that aig store and the giant declares the first dividend in five years.
Ceo bob ben moshe is in the loop.
And it is a real brouhaha.
A fight that may drive you to drink.
From bloomberg world headquarters in new york this is "in the loop with betty liu." good morning, it is jobs day on august 2. we are live from bloomberg world headquarters.
The we're less than 30 minutes away from this monthly jobs report.
We have an all-star to line up ready to walk you through the numbers.
Top executives at aig -- joining us with their reaction and bringing us the view from washington area and -- washington.
We have jobs and the top stories to cover for you this morning.
Sara eisen is taking us inside the jobs numbers with the three things you should be watching for what it comes to america' an a. hans nichols is in washington with a look into the financials of the pine at -- of the president's financial candidates.
And by special cohost this hour -- and my special cohost this hour is more zuckerman of boston properties.
And dell is added again for the first shareholders meeting kicking off later this evening.
As i mentioned we are focused on jobs all morning long.
We are looking at a potential market reaction.
We will head to markets reporter alix steel at the touchscreen.
Give us the guidance from history and what we can expect in the markets today.
Our friends crunched the numbers and found that on average, the s&p declined about 91 hundredths of a percent over the last two years.
Pretty much flat markets.
When the number was stronger we will see an increase of about half a percent.
There was a weaker number, it fell about three quarters of a percent.
I was talking about amy wu -- of talking to eb will -- i was talking to amy wu.
What happens to sectors only see a positive surprise?
We actually see a rush in the safety here.
We see consumer discretionary rise about 8/10 of a percent.
And then it is followed by industrials and energies as well.
On the downside you want to stay out of the way of technology, which usually sees a decline of one percent, all of by financials and the healthcare sector as well.
Clouding today's jobs report will be the fact that the s&p closed at a record yesterday over that 1700 level.
We have also been getting positive signs in the market like the adp and the employment factor.
Back to you.
We are record highs in the stock market.
It doesn't feel that way though in the jobs market.
Markets reporter alix steel.
The meter the sara eisen.
-- let me turn to sara eisen.
She has -- she is going to look at the jobless rate and headline numbers.
Did deeper for what else to keep our eyes on.
The monthly report is a treasure cap of information about our economy from the industries from where the jobs are.
It is what the economists are watching.
Number one, the trend of job growth.
We know that 185,000 jobs is the estimate for how many jobs we will see added in the month of july in today's number, but watch out for how july stacks up.
The revisions we will also get for june and may and why that is important -- we're seeing 2000 -- 200,000 job growth.
The federal reserve wants this consistency, the trend is key.
Chief economist at morgan stanley says the fed wants to see 2000 jobs -- 200,000 jobs for sustainable growth.
They rose $.10 in june.
That was the biggest one-month jump in the recovery.
Wages, as you can see in the chart, have been slow to recover.
Lately there have been some signs for a pickup and the fed has made clear that it is concerned about inflation or lack of inflation.
The third thing i am watching is the labor force participation rate.
This is absolutely critical.
Ben bernanke is concerned about this as well.
There is the problem.
Throughout the recession and postrecession.
The share of the population looking for work has been falling big time, plunging to a three decade low.
Earlier this year and the past few months that trend has been improving, picking up.
It is too soon, economists say, to call a turnaround.
We want to see more people returning to the job market.
That is a key strength for this.
If you add that with wages and the trends of the revisions then you should have a pretty clear picture of what this economy is doing and what the jobs market looks like.
Thank you for that break.
Sara eisen of bloomberg surveillance.
In washington we wait for president obama to make up his mind about the next federal reserve chairman.
Bloomberg news dug into their financial records.
Hans nichols joins us now with more.
What do we know about their financial background?
Collects some of these candidates have been making money out of government.
If you look at larry summers, he made at least $70 million from the time he left the clinton administration to the time he joined the obama administration.
There were some good years during the bush white house.
When he leaves in 1999 his assets are just under $1 million.
In 2009 when he has to refile financial disclosures, he has assets between 17 million and 39 million.
Since he has left the white house in 2010 he has gone back to doing some consulting on wall street.
He is at the ee shock, citigroup, nasdaq, and recent horwitz, he made around $5 million at de shaw.
Most financial disclosures are in funds.
She is between 3.4 and $7.4 million.
There's quite a bit of money associated with that.
Her largest holding is 1.5 million.
They have a stamp collection between 15,000 and 50,000. the third candidate, there is always room for a fourth candidate, he is between a hundred 87000 and 200 and -- and $2 million.
One key question is how much has larry summers made since leaving the white house gekko -- white house?
Those financial closures will have to go to the senate.
That gets into the confirm ability question of larry summers.
Is he confirmable?
Will it really harm him?
At least we know about the stamp collection.
Thank you, hans.
Hans nichols at the white house.
I want to bring in mort zuckerman to weigh in on the candidates and the jobs report.
I know you have written some recent articles about the whole debate in the fed into is going to replace ben bernanke.
You tip your hat to bernanke.
He said he was one of the most important players.
I would say he has to be the most important player.
The financial system of the united states at the moment, it was bernanke.
Thank you was leading -- was the leading authority on the great depression.
He understood how important it was to keep the institution functioning.
Without him it never would have happened.
He reintroduced all sorts of changes in the role of the federal reserve.
The typical quarrel -- typical wall -- typical role of the federal reserve is to help banks loan money on that basis.
That made long-term rates go down or it helps the housing industry and a number of other industries.
And the stock market.
And the stock market.
He was an unbelievable force.
You are sad to see him go?
I think he was phenomenal.
I am very sad to see him go.
He had a unique experience.
He was flexible and had guts.
I think you made and in the west difference.
-- an enormous difference.
I know larry summers, i think he is a brilliant man.
Would he make a good fed chairman?
The interpersonal relations and group relations are not his forte.
It will be a real test of him as fed chairman.
I'm sure he can do it.
He has had a lot of experience.
I think both of them would be terrific.
You have heard some analysts say that if larry summers were to become the fed chairman that would be worse for the market.
Would you agree?
I would not create -- i would not.
Sommers and the fed have to understand the reaction between the finances, interest-rate, and overall economy.
Larry summers understands that.
The only question is will they be as creative as bernanke was in terms of getting out of the spot that we are in.
I know you will be taking buster the numbers.
-- taking us through the numbers.
Tim cook is moving and shaking this morning.
He has learned earlier today on whether president obama will overturn a ban to sell the older versions of the ipad and you -- ipad and iphone in the u.s.. if the president does not take any action to ban will go into effect on midnight on sunday.
Meanwhile u.s. regulators have to decide as to whether any of samsung devices should be banned in the u.s. for infringing on apple patents.
That ruling is now set for next week.
Talking about battles, things are heating up around the dell deal that just cannot get done.
The third media shareholders meeting is get jeweled in texas.
-- is scheduled in texas.
Cristina alesci, tell us the latest, are we going to see a deal finally?
Another day in the dell drama and another deal is on the table.
We are waiting for the shareholder -- for the shareholder meeting to get underway.
13.75 per share plus a special dividend and the shareholders get eight cents in the regular dividend if they were going to get next quarter.
All that is just shy of the $14 per share that we said the special committee was considering in exchange for relaxing those voting rules.
To michael dell and silverlake -- two big concessions they gave to michael dell and silverlake.
Although those factors together make it easier for michael dell and silverlake to go ahead and disclose -- and closed the deal.
We will find up this morning.
We will be back with you on that.
Yesterday, some on wall street view a hollow victory in the sec case.
A former goldman feiss president was found liable on six counts of leading investors.
That raises a lot of questions.
Su keenan is here with more.
A key question is why the sec would after somebody who was essentially not a huge player at goldman sachs.
A lot of renewed criticism this morning, particularly about why the sec allowed goldman to pay a hefty fine three years ago to settle similar allegations and instead put a 34-year-old junior executive on trial.
He was stoned faced yesterday after the jury found him liable on all but one of seven claims that failed billion-dollar deal.
He now faces fines and a potential life bought -- potential lifetime ban from the industry.
Critics say he aims to low.
-- say the sec aims to low.
There is more.
It would seem he has been thrown under the bus.
I am surprised have not seen any other people raise -- wall street is like the army, there is a chain of command.
He was a foot soldier in the army.
He is doing what he was tall.
If he testified, he said nobody ever told him what he was doing was correct.
The problem we have had is he was fast and loose with his e- mails and he left a beautiful paper trail for the government to see it.
His bosses were much clever than that.
The sec went after him because they could.
Many expect there will be an appeal.
How will it be impacted?
It is important to realize one of the civil -- civil fraud aces they found was that tourre was liable on security flaw.
While it paid for the defense to clear its name, many in the community say the faith further exposure on ongoing litigation.
Su keenan, thank you very much.
We have jobs they covered for you from all of the angles.
The ceo of the insurance giant aig and republican congressman scott ritual are all joining me.
And adult children are starting to move away, they cannot get them out of the house.
We are just 15 minutes away from getting the jobs report.
We are just getting started on this friday morning.
I am joined by a lawmaker who thinks congress should not be any summer break until it does more to get her load workers back on the job.
We are joined from the hill.
Mort zuckerman is joining us, as well.
You say it is a disgrace that all of your fellow lawmakers have fled washington to their summer homes?
It is a work.
Some members will be working very hard.
We have not completed our work here in washington.
Only four of 12 appropriations bill that the house is required to pass.
When we come back in september we will only have nine legislative days to pass eight appropriation bills.
That cannot be done.
There are only going to be three weeks until the debt ceiling has to be decided upon.
As a businessperson, turned public servant in only the last 2.5 years, i cannot rasp at this idea of us turning out the lights here in washington when we are so far off track of where we need to be.
In the house we control the calendar.
I have been clear with our leadership and my colleagues created -- colleagues.
I have been very public about this and i am afraid that we are going right into the debt ceiling negotiations without our appropriations bills passed.
And you think it is a disgrace?
Sometimes you are very nice.
I am going to put those words in your mouth.
I am with you.
That is appropriate.
You agree with the congressman mort?
He is a very good point.
The greater the uncertainty the easier it is for the economy to take whatever comes out and and act on it.
Uncertainty is not something that helps a weak economy.
It diminishes a weak economy.
We have to figure out a lot of new policies that are going to turn around this economy.
It is a very tough thing.
We all understand that congress needs a vacation.
Sometimes we would like to take a longer vacation.
In this particular case i think we have real issues to deal with and they should have been dealt with sooner rather than later.
The problem, of course as we are dealing now with a episode that is smaller than what it was a year ago or two years ago.
It makes the idea of further spending cuts, it makes it a little bit harder or democrats to swallow.
That issue is -- compared to what?
It is the evil of two lessers.
The deficit is still a hit show -- is still a huge issue.
It would be under worse conditions now.
I am not saying we spend the money wisely because we have a trillion dollar deficit almost every year.
It does not show very much for it.
Having said that, we cannot afford to go into a situation where the federal government now runs at this stage of the game a balanced budget simply because it will take that much more money out of the economy.
With your republican colleagues, again it will be harder to press further spending cuts when the deficit is going the opposite direction of what has convinced democrats to do this.
I am fighting for common ground and common sense here.
Going out economy is the principal way that we need to navigate through this, unleashing the tremendous potential that we have to create jobs.
I just returned from a trip to louisiana and saw firsthand what they are doing there.
A tremendous economic engine.
We need to bring that same virginia energy opportunity to my district.
The administration is holding that up.
Mort is right, if he had a business that is struggling and failing and asked what your plan is -- we have run out of time.
Thank you so much.
Always great to have you with us.
Mort zuckerman staying with us as we count down to the jobs report.
Lex you're watching in the loop live on bloomberg television and streaming on your phone and bloomberg.com.
It is 26 minutes after the hour which means bloomberg television is on the markets and watching the jobs report.
Take a look at how futures are trading ahead of the july numbers.
They are all slightly higher but you are going to expect the volatility to damper down -- clap down as a get closer to the numbers.
We will bring those numbers for you instantly.
We are on the market in 30 minutes.
Here's a look at our top headlines.
U.s. investigators have uncovered evidence that millions of dollars in trade in providence at the expense of retirees.
Mutual funds clients and interest rate moves in the so- called swaps markets, wall street banks profit by reading the benchmark on those moves.
A sales forecast came in below analyst estimates.
The stock has more than quadrupled since 2011 ipo.
It is still climbing as investors award the biggest online like working service -- online networking service.
It is down to the wire on the dell deal.
Last hour we had breaking news that michael dell and silverlake are nearing an agreement with dell's board over a sweetened bill of $13 and $.75 per share for the cube you'd are maker.
If the committee gets its way on voting rules at a special dividend the announcement may be imminent as early as this morning.
We are standing by to bring you the july monthly jobs report.
Wall street is expecting these numbers to mirror the numbers we got in june.
He are back with mort zuckerman, the chairman of boston properties.
Also with us is scott brown, the chief economist at raymond james.
We will have a breakdown of the number.
Alix steel also have the investor reaction.
Scott, as i mentioned economists expect 185,000 jobs created and the jobless rate to be at 7.5%. where do you think this number is really going to come in at?
I think that is a fair assessment but you have to remember there is a lot of seasonal adjustment that goes on in july.
We can expect to lose 1.3 million jobs in education trier to seasonal adjustment.
You have a lot of teenagers coming out of school and taking summer jobs.
There is a fair amount of noise in july.
I think we have seen a relatively strong trend.
I think investors are going to be looking at these numbers for what it implies for fed policy going forward.
Mort, you have a lot of problems the jobs data.
Lex i would not say they are problems -- i was asking more to that question.
-- mort that question.
Mort has talked about how jobs numbers are not an accurate portrayal of the market.
If you include part-time jobs and take into account people who have given up looking for jobs, the numbers are worse than the 7.5% that is the headline number.
It is closer to 14.5%. that is a totally different number to be thinking about.
That is a better reflection of the weakness of the job market area -- job market.
Many of whom would rather work full-time.
They count those jobs in the end of clement numbers.
Those are the things you have to look through and find out what is really going on.
As you mentioned it is the quality of the jobs and how much those wages are being paid to people going back into the workforce.
Beer cook, our washington correspondent is at the labor department.
-- peter cook, our washington correspondent is at the labor department.
Excellent hundred 62 thousand jobs in the month of july, below expectations.
The unemployment rate jobs to 7.4%. that is the lowest since september 2008. plenty for the fed to digest in this report.
Perhaps more questions than answers.
162,000 jobs last month created.
Revisions to the prior two months knock off another 26,000 jobs.
The estimate for last month from our economists was 185,000. that is the lowest number we have seen since january of this year.
The average, so far for this year, 100 69,000. this number is right in line with that.
175,000 is the preview average.
This is the lowest we have seen since september 2008. a year ago the unemployment rate was 8.2%. dissipation rate takes it down to 63.4 over 0.1%. the total number of on employed dropping 260 3000. the one reason to get that change is long-term unemployed, that is 37% of the unemployed.
As for who is hiring and firing last month, retail is up 47,000, continued strength.
Special business services is up.
Leisure hop us -- leisure hospitality up 23,000. he did see a gain of manufacturing him a mainly in the auto sector.
9000 jobs added there.
As for who was shedding jobs, we have construction down six in utilities off 2000. other services off 2000. not a big move there.
We had federal hiring remaining flat.
Down 2000 or so.
Most of that was postal workers.
We have seen hiring down.
Average hourly earnings, 0.1% drop month over month, year over year.
1.9%. that is the first drop we have seen since october 2012. a report below caught a miss expectations -- economist expectations.
I am glad you mentioned the average hourly earnings.
That is going to be very key to determine where the jobs market goes next.
Alex, he saw an initial drop and now they are coming back up?
It has been a crazy two minutes.
Initially futures fell and then they bounce back up and now they fell again.
The s&p falling into negative territory, just down about one point.
It seems like traders are telling this number relatively in stride.
You can see the dramatic shift we saw a right when the number came out.
We are also looking at the treasury market.
It is a rush into safety.
We do this for the 10 year yield, falling.
It means there is much more of a demand for the safety treasury bonds.
We have the yield back to 2.6%. they have been in the highest level since to the years.
-- for two years.
A weekly gain but now we are seeing a stronger euro, a stronger yen, anything other than the dollar at this point.
In commodities the story really is gold.
The right around $1300 level.
You can see a big rise on the gold price when the numbers came out.
Let me bring in sarah.
They deeper into these numbers for us.
Clearly this is a disappointing number.
The headline number coming in below what economists were looking for.
It is not a total disaster.
The trend is still in place but it is slightly disappointing.
It is also the smallest gain in monthly jobs we have seen in four months.
Retail was a bright spot.
The other thing i was paying close attention to her wages, our -- average hourly earnings . not much growth in terms of wages and average hourly earnings on a month-to-month basis.
They actually declined.
There was hope they would rise as the fed has been concerned lately about inflation.
What it comes to changes in manufacturing, a lot of people are watching this as well.
The president talks about america's manufacturing resin science -- renaissance.
The only other thing i want to point out to you in terms of not so great news for the economy is we did see the prior month revised lower.
Yes, the trend is somewhat in place.
You want to stay closer to 200,000 jobs growth, especially with the federal reserve wanting to taper back some of the stimulus.
That is why i want to bring in scott brown, the chief economist at raymond james, and morton zuckerman with boston properties.
-- and mort zuckerman with boston properties.
This takes tapering off the table.
I think what the fed said earlier this week, the fact that growth has been relatively modest in the first half of the year, there is some concern that inflation could be too low.
Some increase in mortgage rates, all of that suggest tapering is probably likely to be delayed beyond september.
Investors should remember that the purchase program was never meant to last forever.
It was meant to be a temporary patch to get some momentum going in the economy.
It does appear that we need a little bit more in the short term.
The fed will be providing accommodation even as it scales that the rate of purchase.
Reportedly it is relying on that emphasis on short-term interest rates, remaining very low.
That should continue to provide support for the economy.
The stock market, we are in this sweet spot where the economy is improving but it is not improving so fast that the fed really has to take away the punch bowl.
As you are managing your businesses, as you are looking out on the economy, are you hope that the fed does not start to taper.
Do you hope that bernanke continues with the bond buying program?
I think it is essential.
We have had the worst recession since the great depression and the weakest recovery that we have had of any of the recoveries since then.
We have had a very low level of growth.
We are averaging a gdp of under two percent.
It is in the context of fiscal stimulus of over a trillion dollars per year on average.
Monetary stimulus is unprecedented.
We are still unable to grow the economy at the general rates at which the economy improves after a recession, which is generally over four percent.
We have something going on in the economy we do not understand.
To take away the stimulus to the extent that we get it would be a disaster.
I just hope we do not get into a situation where some event causes confidence in the economy to really unravel.
This is what was worrying in this report and average hourly earnings, they went down month on month.
Peter talked about down 0.1%. i want to play for you one comment we got a few weeks ago from the mcdonald's ceo who has been under pressure.
Under pressure to increase wages from striking workers.
They say they want a minimum wage raise to $15 per hour.
I think we have legislators and many people who would determine whether or not minimum wage should be raised.
If minimum wage is raised we have always been an above minimum wage employer.
We have always rebutted opportunity.
Whatever legislations come, those will come.
Our system will abide by any of those legislations.
We are about dividing opportunity.
You talk about more people coming into the workforce.
Do you think movies like the doll should increase their wages?
I cannot make a judgment on donald's federal wage policy.
-- on that donald's federal wage policy.
Of course we would like wages to be higher because that would improve the income of the instant -- the income of the consumer and there might be a stronger response and the consumer market, which is one of the things that has taken us economy out of a recession.
The real issue is not so much the wages, although that is an issue.
The real issue is the number of jobs.
We should be creating over 300,000 jobs every month now in order to begin turning around the economy.
We are nowhere close to that despite the fact we have this huge fiscal and monetary stimulus to the economy.
We cannot get the economy growth at a reasonable rate.
Another problem that a lot of folks and economists are focused on is the length of employment.
-- of on employment.
More than 27 weeks or more, and is staying the same at 4.2 million.
That is 37% of the unemployed.
Economists say if you really want to look for every covering that for a recovery, we need to see more traction.
That number is staying the same.
One of the great problems with that.
It is much more difficult for them to get a job.
People say that maybe they have lost their skills or they are no longer relevant.
That is a huge problem for our country where work is most important definition of the lives of most families.
A career and having a job gives you a purpose and it is also your way of living.
Thank you for joining us.
Mort zuckerman, the chairman of boston property, sara eisen from bloomberg surveillance, scott brown is staying with us from raymond james to go through the numbers that came in, and peter cook, our chief washington correspondent at the labor department.
We are going to have more on jobs.
Our all-star line up includes the insurance giant, the ceo of aig will be joining us in the next hour.
Rex the country added 162,000 jobs in july.
The jobless rate fell down to 7.4%. our chief washington correspondent eater cook stays with us.
Alix steel is with us as well.
We are in the red now.
Raymond james economist, scott brown, is with us.
We talked about the tapering program.
What do you expect policymakers to say?
I do not think they are going to say a whole lot.
We do know that fed policy moves are going to be data dependent.
I think the fed was caught a little off guard by the bond market reaction to the tapering talks.
It didn't really matter much whether the fed begins to taper in september or december.
The market reaction has been -- that is now a factor in future policy decisions.
I think the fed has been very clear.
I do this as a living.
I am used to reading what the fed says and interpreting it.
I do not think the markets are all that good at perceiving what the fed says.
I think that has to be a real important factor.
The fed has to communicate to the markets that this tapering is going to be a natural process, but even if they slow the rate of purchases they will be adding accommodation.
To your point, investors and traders have to react and not only interpret.
As you say, hats that reaction was ahead of what the fed wanted to see.
Thank you so much for joining us.
Scott brown, the chief economist at raymond james.
As we continue to focus on jobs, we look for where the growth is.
Healthcare reforms driving up the demands.
That is next in the loop.
The jobs report showing fewer workers than expected in july.
One sector of the labor market that is hot right now is nursing.
The demand for nurse practitioners, in particular.
Olivia sterns is here with why the affordable care act is fueling demand for them.
The u.s. is facing a critical shortage of primary care physicians.
General practitioners, internists, your first point of call.
When the affordable care act there will be millions of more americans seeking out this time eric care.
One potential solution to plug this gap is to try to transfer some of the load to nurse practitioners.
There are currently 100 67,000 practicing in the u.s.. that number is said to grow to 250,000 by 2025. i actually went over to meet one for myself.
She has a phd, so you can also call her dr.. the laws do vary from state to state.
All mds have graduate degrees.
-- all np's have graduate degrees.
They can also write prescriptions themselves.
We are cost effective and necessary mainstream provider.
If the affordable care act is going to work and if we are going to recognize savings we have to look at primary care, preventing the problem him and once a person has a problem, managing the problem.
Just to give you an idea of how the u.s. backs up, take a look at how the united states compares to uk, france, and germany.
We have the primary physicians for 100 people, it is less -- for 100,000 people.
That is less than a fifth of france and germany.
For all of these reasons, it really is a hot sector of the jobs market.
It could be a smart way to bring down costs overall.
When i am in my doctors office i am not smiling like you.
You looked like you were having fun.
They told me i was taller than i thought.
Thank you, olivia.
Nurse practitioners, that boom in jobs.
Hardened americans are trying to get back -- dunkin' donuts announced it is going to expand big time into germany.
The country already has 35 stores currently but duncan plans to add -- but dunkin' donuts plans to add more over the next few years.
They are looking for opportunities in france and england.
We are going to put aside jobs in the economy so we can discuss one of the more controversial issues of our time, when is a here is a question that can only be answered by opening up a cold one.
Ken america's brewers make an authentic craft beer?
This is an authentic craft beer, it has been applauded for its taste even buy beer drinkers who would not be caught dead with others are -- with other of their brews.
That is the craft brew industry.
Yesterday the trade group published a blacklist of companies that did not fit the definition of a craft brewer.
One of those craft brewers said companies like miller cools are trying to cash in without being a handmade beer maker.
What is our suggestion?
If you like the beer, just drink it.
It is just beer.
It is about 56 minutes after the hour.
Hubert television is on the market.
Markets are fluctuating as the u.s. added fewer workers than anticipated in july.
The unemployment rate stands at the lowest level since 2008. let us look at two important names in the premarket that are moving.
Dell is up three percent.
Rbs is moving ahead of the open after getting an upgrade from shore capital.
We are on the markets again in 30 minutes.
Coming up we will talk about the jobs report from the ceo -- with the ceo from one of the world's largest bond funds, mohamed el- erian.
And off ben moshe a -- bob benm oshce.
You are watching "in the loop," streaming on your phone, tablet, and bloomberg.com.
30 minutes to the open and bill.
This is "in the loop with betty liu." the u.s. said on hundred 62,000 jobs in july, short of economist estimates.
The unemployment rate fell to 7.4%. then the shea will be "in the loop was quoted to discuss his company's better than expected earnings report -- "in the loop" to discuss his company's that are than expected earnings report aired.
Let's get straight to the markets desk for the countdown blitz.
Have to watching today here in -- have to watch eaton today.
It says that global economic growth is lower than expected.
Hi am watching shares in linkedin and they are rising in free trade.
That is after we do the next acted -- that is after weaker than expected sales forecast.
Shares have more than quadrupled since the ipo.
The u.s. added 162,000 jobs in july, below what economists had estimated.
, tulare and -- mohamed el- erian joins us to weigh in on this report.
Also with us is peter cook.
Peter, everyone is wondering what this job report means for the fed.
Right away, it makes their job that much more complicated in one thing that a striking about this report is how consistent was the fed's on statement from a few days ago.
It moderated their assessment of the agronomy -- of the economy.
We got 162,000 jobs, not as many as expected or as we have seeing in prior months did it suck that should somewhat professed or as we have been seeing in prior months.
-- not as much as expected or as much as we have been seeing in prior months.
For a lot of americans out there worried about the economy, they will see that the unemployment rate is going down.
In terms of consumer sentiment, that may be a positive.
Mohammed, it is an interesting point that peter raises herein while investors focus on data points like early earnings and the jobs growth, the public focuses on the jobs less rate.
The headlines tell you that the labor market continues to improve, but at a frustratingly modest base.
The earnings, long-term unemployment, youth unemployment, the signal going out to the public is different from what goes to the policymakers.
Congress, please don't create extra headwind because of the great ceiling -- the debt ceiling.
We will get to the fed in a moment.
But to the debt ceiling will come in the next six weeks.
How damaging do you expect this could be if we see a prolonged debate over the debt ceiling, which we have experienced already before?
How damaging could that be to the harmony best of the economy?
-- how damaging could that be to the economy?
It stops our economy from expanding at a rate that it could be expanding.
We hope that congress learned from 2011 and that it will not put itself back in this minefield.
There is no reason why.
If it ends up getting back into this minefield, we will have uncertainty in the u.s. at the same time of renewed and sitting tea in europe with the german elections.
Please, no additional headwinds.
Peter, do expect that congress will do anything with this report?
I think they will fight over how strong or weak the economy is, like they have been doing for the last couple of years, flooded already by statements from both sides here in.
I think it highlights that the gridlike is likely to continue.
There is no clear endgame.
And the larger fight over government spending.
I would like to get mohammed's take on whether been burning the -- whether ben bernanke will factor that in?
I think that they have to factor in the fact that the downside risk of this, both internal and external -- if they are going to taper, they have to do it not just because the economy is improving, but because they are worried about the lasting damage.
I think it is less likely that they will taper in september.
Weaker data between now and said timber -- and september and a reassessment of the cause and risk as mr.
Bernanke puts it.
Remember, the reason they want to taper is both positive and less positive.
Oz it because the economy has gotten stronger, but less positive because of potential collateral damage.
-- they want to taper it because the economy has gotten stronger, but less positive because of the dental collateral damage.
It is very complicated and also because we saw the markets react so violently to even the thought of that tapering, which is something that the fed now has to consider when it makes its next move.
Peter , in a strange way, the fed is fueling a stock market that is going to record highs, which means that congress feels like they have more room to continue the gridlock because the markets are not forcing them to do anything.
That is certainly a feeling you can get up here.
There is a certain sense of complacency.
If we do see the makings of a real debt ceiling showdown again, as we emerge from this congressional recess, you will see markets respond to that.
One markets respond, lawmakers respond to it but does take a crisis to get congress in gear and the administration in gear.
Thank you for joining us.
Mohamed, i would like you to stay for this interesting big number that we have this morning.
21.6 million adults age 18-30 one still live with their parents.
That is a record number.
-- 18-31 still live with their parents.
That is a record number.
Money or the lack of money is a big factor.
Also educational costs.
40% of those only have a high school education.
The reason i wanted to get your reaction is that i know you have spoken" -- spoken eloquently and often about the state of our union generation and this is an example of the trouble they face in the stock market.
It absolutely is.
It speaks to income and debt issues.
It also speaks to the fact that they has a market has moved quite quickly from them and it is difficult to move into the house and market for the first time.
Because we had kids, we worry about the cost for the next generation and their ability to continue to increase their standard of living and make sure that their kids do better as well.
Stay with me.
We will talk more about the fed.
Also still ahead, an exclusive interview with the aig ceo.
Shareholders will get their first pay out in five years.
You are "in the loop." we are back in two with mohamed el-erian.
Let's turn to the issue of the fed.
The other issue that is in the newspapers these days, which is to will replace chairman ben bernanke?
If you had your choice, who would you pick?
I would find it very hard to hit from two very qualified candidates.
I think this is something that the president has to decide, weighing experience, talent, communication and leadership style.
What is really unfortunate, which has an impact for the markets going forward, is how public and polarized this debate has gone it -- has gone.
-- has gotten.
It would have been that way anyway, right?
The fact that this discussion is happening so early and everybody is getting into it -- remember, what that does is forces people not just to focus on what is good, but also forces to focus or find differences.
That is not a good thing.
What you really want is continuity of monetary policy to make sure that it continues to allow the economy to heal.
Again, if you had your wish, what would you want the white house to do?
Should he end it by announcing early?
I think there is an argument for announcing it early and then moving on.
Easier said than done.
Let me play for you a comment from the last hour.
This is his take on larry summers, one of the candidates.
Interpersonal relations and group relations are not his forte.
Economic sand finances.
The extent to which that he will have to bring people along with him will be a real test as fed chairman.
I'm sure he can do it.
He has a lead of experience in the stage of the game.
Would you agree with him?
I think that whoever is appointed has to bring the committee with him or her urine soaked.
So that is one criteria that needs to be looked at.
This is not a committee that the chair gets to choose.
It is a committee that has quite diverse views.
There are different ways of doing it and we have seen different styles from chairman greenspan to chairman bernanke.
It is a key issue and he is right to stress it, but so is talent, experience and communication to the rest of the world.
In your view, who is better at being able to -- who is better at interpersonal relationships?
Is it the larry summers or jenny yellin?
I cannot tell you which style of leadership works in there.
That is directed to people who has been there.
Ultimately, it is important that the president make a decision set on a -- a decision based on a set of criteria.
I cannot be based on criteria.
At the end of the day, the fed is a function of a basket, not a single thing.
Now that the speculation in the game has begun, the markets are now reacting to all of this chatter.
They have stock markets that are rattled because people are saying, look, if larry summers was appointed, it would be worse for the market because at least with yellin, bernanke policies would continue.
This thinking is based on the following.
The very impressive rally we have had reflects two things.
One, the view that the fed will not brought the books.
That the fed will be an enabler of the financial markets and that is the only way that the fed can get to the real economy, with animal spirits.
And the second thing is continuous signals that the economy is improving and is approaching escape velocity.
The minutes used in art questioning one of these two things, the market gets nervous to the market prefers continuity in the fed at this stage.
Quite whoever gets put in that chair -- again, there could be a dark boards candidate we are not even talking about -- whoever is in that chair come a realistically, can that person change fed policy that drastically?
The person will have to make judgments along with colleagues on the fomc.
As peter noted in the beginning, as i noted, it is very complicated to they will have to make -- public it.
They will have to make judgments on hard information, based on the fact that there is no historical experience to.
We are so deep in experimental criterion now that we have no idea how this will involve.
It will matter who has the fed.
We are in uncharted waters for now.
Thank you, mohamed el-erian, the chairman of pimco.
More breaking news out on dell.
They have agreed to complete this deal to purchase the computer maker.
They will adjourn the special meeting to december 12 two.
They have agreed to a deal that $13.18 per share and they will provide a special dividend to shareholders at $.13 a share.
Again, the special committee of dell and michael dell in silverlake have come to an agreement to buy out the company.
The stock is up 5% in the premarket.
We will have more in a moment.
It is 26 minutes after the hour, which means that bloomberg television is on the markets.
As you can see, futures are trading pretty much flat.
The s&p futures are exactly at 1700 after crossing that rush holt for the first -- that threshold for the first time yesterday.
The jobs number is what turned the tide earlier this morning.
Futures were climbing but then got the disappointing jobs number.
The nasdaq is up about 3/10 of one percent.
Let's get back to the breaking news on dell.
That looks like the deal has come between michael silverlake and dell i have reached a compromise, $13 70 five cents and an additional $.13 and they are guaranteeing shareholders a regular dividend of eight cents.
If the -- it is really what the committee wanted to see, relaxing the voting rights.
There will be a whole new class of shareholders in this stock.
That will make it easier for michael delta it -- michael dell and silverlake.
There are more players moving into this stock am anticipating that this deal would happen, even people who are more likely to be inclined to vote in favor of the deal because they want to get in and get out.
That is obviously going to help michael dell and silverlake.
Also, they will get that voting requirement that will have absent counting is no votes.
It looks at everything is keyed up in this deal, much to the chagrin of carl icahn, who will continue to petition the courts to stop this deal from happening.
There is likely more to come from what we have seen in history here.
We will have more from you later on the dell deal.
After the bell yesterday come aig reported operating profits exceeding expectations.
It announced it would pay dividend, $.10 per share.
The company also said it would i back up to a billion dollars of its own stock -- it would buy back up to a billion dollars of its own stock.
Bob benmosche is with us you the -- is with us.
Nine what are you telling your staff about what you see in the economy, where easy the job market headed?
I think we have been saying for quite some time here at aig that we think there is a very strong economy here in the u.s.. at the core.
We are finding that the expansion has been some unlimited and that is where you need to see job growth coming, from that expansion.
We have been able to see the building pressure on the overall market and business because i feel it is the rhetoric on two beta fail and financial institutions -- on too big to fail and financial institutions.
I think it is capital requirements and the gritty and the whole discussion about what businesses you can be in.
I go back to this concept of too big to fail.
We have to be careful of institutions that are too large, but i think we understate the amount of work that has been done.
I will say a thousand times and maybe 2000 times -- financial institutions like aig and the banks who have made enormous progress in strengthening their organization so that the taxpayer doesn't have to bail them out in the future.
Nine but we are still talking about it -- in the future.
But we are still talking about it.
But the economy at the core strong.
Regulators haven't come out yet with exactly what are the requirements of a firm like yours under the designation.
That hasn't stopped you from saying, look, i will still issue a dividend now and i will buy back my shares.
The most important thing we need to do in business is run our business is the right way.
We have been working very hard on building the fundamentals of aig, restoring the company to its great strengths again.
And we're doing that the right way.
When i sit down and show the rating agencies our ability to continue to run -- to perform, the federal reserve is observing things, it is the aig board that makes that decision saying are we satisfied with the stress testing that aig has done, making sure that we're not putting anybody at risk risk anymore, especially our clients?
Then they decide whether it is good to buy back shares.
But that is what i'm saying, bob.
Hei know you are saying that regulators are making it more difficult for companies to operate because they have all of these rules around too big to fail and it is difficult for companies to operate, but at the same time, companies like yours and your board included are able not to pay back shareholders, able to do business as usual.
What exactly do you think is holding back a company like aig?
What we have to be careful of is that we have to demonstrate come especially to the federal reserve now that we are -- remember, we are receiving zimmer holdings company.
We are under a different purview -- we are a savings and loan holding company.
We are under a different purview.
It is not just what are capital ratio numbers are, but what reduced the numbers.
It's a is a new game that we will play in 2014. then the federal reserve will have a lot to say about what we ultimately do and their satisfaction with what the numbers are.
It will be a different level of regulation than where we are today.
Having said all that, we need to run the company the right way.
That is what we need to continue to do and we will make sure that, whatever we do, we will do nothing to risk your credit ratings or two maker clients feel that we cannot live -- or to make our clients feel that we cannot live up to our guarantee.
I would like to talk about the fed in a moment.
I want to give back to jobs.
In the conversations you're having with your staff, your team in houston and elsewhere., people look at the insurance agency and people say i see metlife cutting jobs and all states as well.
I think we are constantly moving jobs, dealing with costs and so on.
Everybody has to do that these days.
We are shipping jobs from different cities sometimes and we are moving jobs and to houston.
We are moving jobs from houston to amarillo, texas, from houston to manila and kuala lumpur.
We are moving jobs around to where we can get the best workforce at the right price.
We are managing expenses.
We have a core group of people here in aig and we are continuing to invest in those people.
We have the training program to invest in our leaders.
It is all about growth.
We are not looking to shrink ourselves and to green as airy -- into greatness.
You mentioned moving people around, people have been speculating a while whether you will move your headquarters from manhattan.
Is that on the table?
We would like to be relocating to a building we own on mortar street, right around the block.
So we will be going very far, literally one block away.
We had a short term lease.
It is intended to be short-term.
When i got to aig and it was too late for me to save it, they sold the 70 high street iconic building in downtown for very little money airy.
We are now moving to 175 water street where we will have the corporate offices of aig.
Will some of those jobs move elsewhere as you say, to texas are the parts of the world?
We are looking at jobs in new york, jobs everywhere around the world and moving jobs from time to time where it makes sense.
To the extent that we can be efficient, technology will play a greater role on how we operate our businesses.
We'll see some jobs go away,, sometimes move, and some jobs command.
For example, in the new york area, we built a science group, a group that is helping up move rapidly into data analytics and helping us use information to make a lot of are underwritten decisions.
We have expanded that science group in new york while we move some nonessential jobs that are high cost in new york maybe to texas, maybe to amarillo, maybe to kuala lumpur airy.
We will be back with bob benmosche a to talk about his outlook for the insurance business.
We are bok with aig ceo ben moshe -- bob benmosche.
They had been expecting this a little later.
What it went into the decision to announce the dividend yesterday?
As i have said all along, our priority for salazar covers ratio, making sure that we have the right level of -- our priority for us as then our coverage ratio, making sure that we have the right level of coverage.
We wanted to make sure that we could increase the universe of shareholders who can own aig airy.
We know there will be some profit taking airy.
In order to get to where we are today, we run a stress test.
It is very similar to what the federal reserve will require.
We are not exactly sure what they do.
But we have a general understanding.
Here's what we did for the board of directors of aig.
Nine in a stress test, what we said -- aig.
In a stress test, will quickly said was that -- what we said was that, instead of achieving our budget for those two years, we underperform and we do it by making $23 billion less airy.
In addition to making $23 billion less, let's assume that the snp approaches 700 -- the snp as&ps&p approaches 700. this is armageddon you're talking about, bob.
Nine not too big.
We are not at 700, the last time i looked.
We are determining a 12.5% unemployment rate.
We are taking housing values down.
And then deal have any money left over?
In fact, we demonstrated to our board of directors that we have money left over.
So when the board is confident enough that we can handle a catastrophe of that size and still have money left over, that is a money we are using for dividends and for our share buyback.
In this quarter alone, we received $1.3 billion in dividends from the companies holding dividends -- from the company's holding company.
You do a by doing business in a written way.
Texted you have to consult with the regulators to sign off on this?
-- did you have to consult the regulators to sign off on this?
They look at the things that we are doing to make sure we are doing things appropriately.
It is the ratings agencies that are a constraint for aig.
I went to them and shared with them this in arms stress test.
Nine when they see all of that and they say we are comfortable that your ratings are fine if you do what you say you will do.
Then the board of directors ultimately has to make the decision airy.
Are they confident that we will not come up short in the future because of a disaster something else within the economy?
It does sound like a pretty disaster scenario that you put the company through in that stress test.
And by the way, i forgot to mention, top of all of those financial crises, storm sandy goes back to new york and hits us with another $2 billion loss.
For my house come i hope it doesn't. there you go.
I do, too.
Some were surprised.
They felt that you and the board would wait until he would finish the sale of the aircraft leasing unit to the group of chinese investors, that that would finish before he would talk about any capital plans.
Is this deal still happening?
We are continuing our dialogue with the chinese group.
Remember, we are not dealing with a buyer, that a group that represents the purchase of irc -- of iofc.
We are working through that, but we are also working on a parallel deal.
If we don't come together and the ipo is now ready to go, we will dropped our discussions with the chinese and we will move into the ipo during for now, -- the ipo.
For now, we will continue our conversation.
He will do capital management all the time and in no way that is prudent for the company and where the company is and where the economy is.
This isn't about a similar event.
This is about how we will do business, monetize our epa and how we will produce operating earnings.
We will be prudent about it.
So it's a continuum.
But the waiting part on the field, three deadlines have been missed on completing this transaction.
So the shareholders, investors and analysts are asking the question.
Is this still going to get done?
What is the hold up?
The hold up is complexity.
The hold up is we're dealing with a group of people instead of just a buyer.
And we are dealing with a very comp company.
We urge you -- a very complex company.
We are dealing with all these things it can together which is complicated to.
We are moving forward as much as we can, to meet -- as much as we can, continuing to work with the other group as much as we can.
We saw the way to go before we get to the ipo.
It is prudent to get the best deal for the aig shareholders.
Stay with me for a little bit more airy.
We will next tackle the fed.
Stay with us.
You are "in the loop." bob, as you and i discussed, the fed will be a bigger and bigger part of your life next few years.
Given that, who do you want to be the next fed chairman?
I do know that there is anybody i want.
I know they haven't asked me.
I guess i don't have a personality that goes with the job.
Would you take the job?
I think it is a thankless job.
I must say this.
I hope that the person who comes into the fed comes in without the controversy and can provide the leadership and the calm hand that chairman bernanke has provided.
Back in 2008, there was a lot of criticism about what should have been done.
The people in government in america at the time of the crisis needed to act to and i think the -- needed to act.
And i think that chairman has done what needed to be done.
I don't that think the federal reserve gets the credit it deserves.
We have strengthened and improved the safety of the financial system in a very big way.
Whoever comes in will have to deal with enormous amounts of war competition for regulation.
Aside -- amounts of world competition for relation.
From the monetary and relocation -- andrea a side of it, do you think that it will start -- from the monetary and regulation side of it, do you think that they will start to raise rates too soon?
A real big part is how are we dealing with all the regulation and competition for regulation around the world.
If we continue to straitjacket our financial restitution, which have been behind the enormous growth of businesses around the world, -- our financial institutions, which have been the enormous growth of businesses around the world, in terms of aig and insurance companies come i am surprised by the people who are not in the category.
All of us will find ourselves in a very different competitive environment.
Instead of focusing on growth and business, we will be focused