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Vanguard head of fixed income Bob Auwaerter says the number of people on disability continues to rise.
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Friday.
Our next guest is paid to worry Bob all water oversees 670.
-- Dollars in fixed income assets at vanguard.
So what is his biggest concern now the turmoil in Europe.
But the weakening US job market Bob always terrific to see you what are you worried more about -- -- them.
Wow boy does not so tough the one of -- two figure out there.
With Europe I I debt.
OK yeah I thought I think.
Would like.
I really think what the issue was going to be is that a fair a fiscal -- the agreement between France and Germany.
There's just going to off fall -- -- seeing evidence so that this morning.
Chancellor Merkel comments to.
The new French president that does not open and in the negotiations -- renegotiation.
And engineers saying man angry sur area which is still bit of a sideshow but -- -- friend Jeff party elements both both the far left and the far right one.
And both on how one thing in common they want to -- break the pack so I think ultimately that's going to be big problem there are as well so.
It really comes down to fit the average person average voter and in Europe is just rebelling -- the things that need to be done in order to.
Get Europe back together a wonderful sound fiscal basis.
What and speaking of fiscal soundness in financial soundness here in the United States.
But how concerned are you about that jobs report on Friday ended.
But basically our economy weakening in the months -- com.
It's sort of -- -- dirty little secret about this recovery and that the number of people on disability.
Just continues to rise.
And the first four months of the year 333000.
And payrolls of only 700 and 5000 -- certainly not a good trend for the economy so.
You have people dropping out of the labor force because they can't get jobs that they're going on disability dropped out of -- labor force.
And a centrist thing if you look at the labor force participation rate -- -- started recovery in June of 09 since then has dropped by about two percentage points.
Normally in a economic recovery.
The later participation rate goes up BP's people feel more comfortable try to go on actually just find a job of this.
Environment has gone down now if you make the assumption is a little bit of a stretch assumption would just assume for second that the reason why.
All those people dropped out of the labor force of because they couldn't find jobs.
Any unemployment rate would be close to 11%.
So.
You -- it's certainly not 8% mother's 9% or 10% realistically I'm not sure what the what the number is but it said in a very -- -- recovery.
Given that would you be a buyer of treasuries here -- -- at the ten year yield it's at one point 88% today where does that leave you as an investor bomb.
Well you have you have a situation where treasuries are always the flight equality vehicle on people feel uncomfortable right now your trading at the low end of the yield trading -- Since the beginning of the year.
There's a possibility could go all little bit lower blood I don't think -- they have much value at this particular point in time given the run up -- -- -- the last.
Couple weeks or so.
What has the most value here in that full spectrum of fixed income assets that you can put money and.
I I destroyed have or.
There is saying I would characterize as chief because credit.
Has run up quite -- People buying corporate bonds whether investment grade high yield emerging markets is had.
Secular rally is as well so I really -- not characterize anything as cheap at the moment.
So in that environment I I would suggest to people to stay well diversified across -- a lot of different classes of bonds rather and try to put all your eggs in one basket.
Bob it was great to talk to you as always thanks so much can you can talk about the world and we appreciate it and have -- you are bottle -- of vanguard --
