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bill this is a jobs report that the president will love he will take a massive victory lap any president would on 300,000 plus jobs with revision how would you temper the president's enthusiasm over this terrific employment report well I think you'd temper it Tom with the fact that wage of seven increased and the focus of the Trump administration in addition to lower taxes has been to increase wages for the working woman and the working man and we don't see that happening you know obviously there's been a trend since the last two or three years for wages to move from one and a half percent annualized to now 2.6 a little bit lower than last month but in any case you said 2.6 isn't going to get it done and it's probably the case that you know the headline of a tremendous jobs report is going to be tempered by low wages the girls has really taken back yesterday by the ballet of Mario Draghi is one central banker in delaying and waiting until seeing inflation do you invest now just assuming all central bank's whether they want to look at expectations or forecasts are gonna wait until they see the white of inflation sighs yeah I think so especially Mario Draghi I mean he's been the most dovish obviously the policy rate for the ECB is the close to the most dovish relative to I guess the Bank of Japan they don't seem to ever want to move it or talk about moving that we know towards the end of the year that the quantitative easing for the ECB is going to come off and and that I think will be significant but yeah central bankers are very cautious and the reason that they're cautious it is that they're fighting a strange battle instead of fighting inflation which is the old mantra of central bankers everywhere at least 10 20 years ago they're fighting the potential for deflation and so they weren't wanting to see 2% inflation before they really do significant action and of course currencies which is one of your main focal points currencies play an important part of that if the euro strengthens that that's a negative for higher inflation in in Ural and so we're just gonna have to see there so bill that raises the question how difficult is going to be to get 10-year yields anywhere near to 3% from where we are now at about 287 given the forces pushing the other way yeah I think 3% and I think we'll get there but I think 30% plus or minus and now we're at what 287 you know it's gonna be where we rest for a good six to nine months maybe for the balance of the year it all depends of course on what the Fed does what Powell thinks and how he drives his team but I think instead of three or four I think we're looking at maybe two or three certainly we're looking at March in terms of an increase but you know at the end of the day and maybe at the end of the cycle I think we're gonna see Fed Funds somewhere around 2% there are two and a quarter percent as opposed to two and a half a 3% was what the market expects and so a ten-year at 287 is probably perfectly positioned for two to two and a quarter percent on Fed Funds not well positioned for two and a half to two and three-quarters but we'd have to say this is pretty good for risk assets this morning just taking this jobs report alone it looks like the output numbers are absolutely solid the reflation resources aren't there to disrupt kind of the positioning that we've seen build-up in equities for instance and in credit over the last couple of years the last time we spoke to you the last few times you've talked about that short position you had on high-yield on junk debt have you still got that short position on in junk bill yeah I do you know high-yield spreads were very very narrow and they're less narrow now so the position has worked out I think over time because of the large increase in corporate debt and certainly in terms of high-yield debt and the potential for higher yields certainly since the past 18 months as the Fed has raised interest rates to impact margins for lower quality companies that high-yield bonds you know won't necessarily suffer but that I don't think the spreads are going to narrow and so it pays I think while you're you know giving the the other side three and it has three and a half percent in terms of a spread I think it pays to sit and wait for those spreads to widen gradually but nothing nothing significant and I do agree with you that the risk asset market should benefit here but you know there are negatives on the other side through the economy and we can talk about that in a second if you care
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