♪ >> all eyes on jay powell and the fed and the fed focus today is an what happens tomorrow. romaine: welcome to bloomberg markets. this is fed decides coverage. a week of market speculation about what the fed is prepared to do next comes to a head in

about two hours time. to rate decision by the fed widely assumed to be a decision to keep the federal funds rate steady for a fourth straight meeting at 5.25%. the real big decision is likely what the policy statement should say followed by a big test of jay powell's commit occasion skills when he takes the podium for questions at 2:30 p.m. in washington. rates rallying today ahead of the fed decision. all the yields are falling to their lowest levels into axon some of that is tied to regional bank worries which is added to pressure on those yields and treasuries had rallied on monday after the department lowered its estimated borrowing needs for the current quarter. a more detailed announcement this morning on the issuance for each duration didn't move the needle a lot. what we saw out of new york community bank and a couple of others, it did. it's on the back of the earnings report. elsewhere, modest dips in the dollar versus the euro versus the yen versus the swiss franc.

me just more meaningful dips in u.s. equities. those moves in the equity market driven by disappointing earnings out of alphabet and amd rather than any disappointment around the fed. we have wall-to-wall coverage of the fomc meeting starting now and extending to the closing down and beyond. we hear from the head of fixed income and from legendary wall street advisor richard saperstein. in the 2 p.m. hour, the former fed vice chair richard clarida to and former new york fed president bill dudley and in the 4 p.m. hour, i will be back with the former fed governor betsy duke. let's kick things off and studio to with blackrock's head of macro research who leads the portfolio management groups research and the global corporate debt market, private

capital and real estate and infrastructure lending. this could potentially be a big day for the markets i'm curious whether you think the pricing we are seeing in this market now is priced appropriately for what you think we will hear in the next couple of hours. >> good afternoon and thank you for having me. i think the market is really priced for a rather supportive outcome from the fed. it's a fed that would be willing to calibrate and adjust interest rates and the policy rate lower in response to improving inflation but not a fed that's waiting for a downturn in growth to adjust that monetary policy stance. i think that is really what the market pricing is reflecting, is a central bank that is proactive and really willing to get ahead of any potential growth downturn, probably a different outcome than what we expect from the ecb where we think the catalyst for rate cuts would likely be further growth deterioration. romaine: is this a growth story the fed has to contend with or

is it still about inflation? >> the growth backdrop is been supportive so the fed and its dual mandate is focused on responding to the inflation but given the lags in monetary policy they continue to reference, avoiding a situation where they are causing undue damage to the economy by keeping rates in this restrictive territory. i think it's really about responding to inflation at this juncture as opposed to really responding to any growth. a potential for growth deterioration is a backdrop. romaine: what is the house view at blackrock? we seem to have line inflation coming down and key metrics that look good and get close to that 3% level. -- closer to the 2% level. do you think we will see more momentum in that direction to what the fed wants? >> i think we will see more momentum in inflation

improvement but we are on the lookout for some potential volatility in that path down to 2%. looking at core pc over six months, we we are at the 2% level in court cpi's a bit more elevated. if you think about where there is the stickiness, it's on the wages side. the non-housing services side is something we watch closely. the labor market is rebalancing but still pretty strong and pretty tight. with employment costs and wage costs still in that 4.5% range, we want to see that come down a bit in order to get convincing evidence that inflation is on a sustained path to 2%. we will probably hear something from the fed consistent with that. romaine: it's interesting the moves and yields with the tenure back below 4% but that has less to do with the fed specifically and more to do with some of the concerns around the new york community bank and whether the regionals around healthy spot.

what is the balance between the rate moves we could see this year? that will that be driven by monetary policy and economic conditions or is there a bigger story we should pay attention to? >> as it relates to fed policy, their main tool will be the front and policy range. as it relates to the longer ends of the curve, you got fiscal dynamics which we think will keep long and rates structurally the same. the one thing we are watching closely is how interest sensitive pockets of the market are responding to the moderation we expect. we've seen strategic corporate emanate rebound sharply in the fourth quarter of last year. we largely think it's because corporate have more clarity on the macro backdrop.if you look at commercial real estate volumes which are interest rate sensitive, they have yet to rebound. i think there are pockets of the economy that are still waiting for the growth backdrop to stabilize or improve. romaine: the corporate bond

market seems ahead of the curve or they think they are. spreads across the board were below one basis point this morning. maybe they are around 3.25%. >> yes, the corporate new issue markets are wide open. even a second derivative is what are corporate's doing with their balance sheets? they are refinancing with the issuance coming onto the scene more recently but even the m&a volumes are important to watch. the higher cost of capital environment, you want to see corporate investing in their business with strategic actions. we are seeing that but in certain pockets of the market, it's more lagging. romaine: do you think we will see a pick up on that but the investable opportunity as well? >> in areas of commercial real estate come is very nuanced. we can't painted all the broad russian offices of the most

pressure. we will be watching the structural issue with post-pandemic work behavior or is this a more refinancing led pressure? romaine: barry stern yesterday had little quote about the office market is dead and everybody says they should turn the lights off and that might be an overstatement. we know there are pockets of the commercial real estate market that are probably not going to see better days. that's still a small pocket check up >> it is and i think with the historical evidence has shown us is that it's a long cycle in terms of default and ultimate losses. what we've seen is offices that are vintages of 2015 and later have been absorbed by the market and there is demand for those offices where legacy offices with not a lot of great amenities, there is less demand for that. it's similar in multifamily. there is overbuilding in some pockets but it's a very regional

market and the demand is being well absorbed. just like in corporate credit where we say it's about dispersion but not widespread market disruption, similar in the commercial real estate market but with the important caveat that it's more intraday sensitive and less liquid than other parts of credit. romaine: great stuff here. it will be a busy couple of hours and we are looking forward to the fed decision as the statement drops at 2 p.m. washington time with the press conference starting at 2:30 p.m. we are setting you up for the big event and we will get over the next couple of hours. we will have a number of experts across the market spectrum to discuss the fed decision. earl davis is up next, stay with us. this is bloomberg. ♪

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>> the fed has been reluctant to wade the victory flag but maybe it will start to raise it and blow in the till woods of the economy. romaine: nadia lovell at ubs earlier on bloomberg. this is bloomberg markets. we are counting you down and the drumbeat begins to the big fed decision today at 2 p.m. eastern time with a closer look at the economic conditions. the head of fixed income in money markets earl davis joins us now to talk more about i guess the set up into this meeting. we had a lot of labor market data the last couple of days. reports that the fed is already privy to and when we talk about a soft landing and the idea the fed might have room to either

leave rates where they are or even cut them, are you seeing economic condition supporting that? >> economic conditions are supportive of that if they don't ease. they are on a glide path to the soft landing and the reason why we are on the glide path is the fiscal spending. if they ease, they can accelerate or re-accelerate the economy and i'm not sure if they be able to control it if they do that given the animal spirits. romaine: are they in control now? when you look at the moves in the market in anticipation of the five or six rate cuts and then you overlay that with the stronger economic data, where are we now in that space? >> we are in the zone of arguably animal spirits which is why we don't see rate cuts until q3 of this year. definitely the fed and the fomc want to cut rates.

we are seeing the language and they are always looking at inflation now as the glass half-full. we don't know the economic numbers will allow them to cut rates. given the resilience in consumer spending, we anticipate that to continue for the first half of this year. that's why we don't see eases until q3. romaine: from investor perspective, does the economic data and the fed funds rate will probably still stay at 2.5%, is that it a backdrop to extend duration? >> it can be. the backdrop is that we are later in the business cycle. that's definitely the backdrop. it's been our base case this year that rates will stay within the range of last year, i percent or 3.25% 10 year yields but our highest conviction is

things that will happen our volatilities. we know the markets adopted the numbers that came out today but they continue to increase supply. it will basically be a tug-of-war between increasing treasury supply and declining economic activity. we don't know who will win that but it will test the ends of the range because of that. romaine: what did you make of the treasury refunding announcement? we saw the drop in yields in this morning, we learned about the individual sizes on the durations. you saw a similar rally and treasury prices and additional drop in yields. do you think the overall size, meaning the aggregate is the issue or is it about where along the curve they are targeting? >> i don't even think it's either one of those things. the issue is who is buying. right now we see less buying but more retail buying.

retail buying is very volatility sensitive. q4 last year we had a rally in rates went one way and retail came in. you see this in the ets and a lot of things. if that volatility comes back to the market in regards to surprise economic numbers weatherby employment, retail will step aside. they are stepping aside when we are having 60% more issuance last -- this year than last year. last year was 1.18 trillion dollars in this year is 1.8 trillion and who knows what they are paying on the coupons? that is the question. who will be your marginal buyer? right now it's retail it will stay there for a while but it's fickle. romaine: are you expecting the volatility we see in the rates market like last year. will we see a repeat of that around the same levels? >> 100%.

in 2022 and a 2023, the 20 20's are very comparable to the 1990's. we had extreme rate volatility similar to now but yields your and your with year there -- were either up or down we still have the volatility in that's consistent. going back to your duration question, if the first time we are constructive of duration and buying backups in two years. we have been bearish in 2021 -- since 2021 and now we are constructive and looking at backups to buy. having said that, we are position for mutual duration but we are being short u.s. to your bonds because you win two ways on that. you win later than may or the eases are less than 150 basis points. if the eases are before me, you will get less total eases because the animal spirit is what happens. we are going against the short of u.s. to your bonds with --

against tenure tips. it's a positive carry trade we think that's a great trade at least for the first half of this year3+. you're getting paid above inflation and there may be some sensitivity around rates in the second half of the year in regard to debt sustainability. romaine: the tips trade is more of a tactical trade or is that a real bet on the direction of inflation? >> it's more than a tactical trade because it is 2% real. it's inflation plus 2%, great trade and there is added volatility because of illiquidity in the market. you have to consider four years ago, we were minus but two years ago we were -50 and that we are positive 200-250. we like it. when you look at fixed income with a lot of money made from carrion rolldown which means you need positive carrion we like the duration right now. romaine: you fixed income guys

have been laughing lately. it's your time to shine in the opportunity to make a lot of money and you are one of the best in the business so it's great to talk to you. a closer look at the vix which everything comes down to that fed decision. we have fallout over the collapse of the real estate firm cigna. the chief executive officer at -- is said to step down from his post according to people familiar with the situation. the company declined comment but our reporting says philip rickenbacker said to be stepping bound as ceo of julius baer at its about the $700 million to cigna, the collapse of the real estate firm. we will try to get you more details on that and keep you in the loop and what's going on in the markets as we get closer and closer to that fed decision. after the break, jeff mullen

campell join us about the equity market and a discussion about the shift from growth to value. this is bloomberg. ♪ j.p. morgan wealth management knows it's easy to get lost in investment research. get help with j.p morgan personal advisors. hey, david! ready to get started? work with advisors who create a plan with you, and help you find the right investments.

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romaine: let's turn her attention back to the stock market were lastly, blackrock triggered a $5 million reshuffle in its line of etf's. it was a big bet on the economy and a shift from growth style investments to value. our next guest has been ahead of the curve for the past 15 years researching value stocks, jeff muhlenkamp is joining us now. i'm sure you've seen the debate with a lot of talk about whether stocks are cheap or expensive. going back to the famous essay back in 2001 where warren

buffett made the case that you lay out the ratio stockmarket value to the economy's nominal value, are we cheaper or expensive right now? >> when you look at the buffet indicator, we're still expensive. you made a great case for 20 years ago in the case remains valid. the stock market is expensive. it's dominated by expensive companies up to 30 times earnings or more. romaine: what do you think will get us to a more broad rally? it seemed late last year there was glimmers of hope that investors could look to cyclical companies and look to smaller and mid-cap names and not just the magnificent seven and that fizzled out for a variety of reasons. >> i think the characterization that last year was about the magnificent seven overlooks details in the market. a year ago when i looked at what was happening in january, it wasn't just tech names that started to move up.

even before ai became so top of mind but it was a lot of capital goods names as well. it made me scratch my head area it's been the dominant narrative of the time. we thought we would go into a recession. the price does not reflect that. it seems that you've had a number of industries that have been very much off-site all of 23 and they remain off-site. we crash the housing market in late 22 and we crash the banking industry in early 23 and those are now recovering even as other sectors are sliding to a weaker growth perspective. you've got a lot of things going on the stock market dominated by the narrative of ai and the magnificent seven or six. there is pockets of value there are big pockets of over pricing.

what we always try to do is if we own it, we sell into it and we moved to the value look for the opportunity. for people to recognize the value. romaine: where are you finding value now in terms of market sectors? >> financial services we like energy. energy didn't do anything last year. we still see very nice cash flow yields and a lot of discipline in the industry. if oil prices stay in the range of 70 or $80, they will make a lot of cash assuming they do something useful with it. romaine: you mentioned financial services companies. are we talking about the traditional big money center banks or something else? >> it's something else. there's a couple of names we like that are kind of a niche like bc corporation.

they went from a partnership to a c corp. last year. that happened last summer and it continues now. we still like them and we like mortgage insurers. we think they've got a great business and they are selling at reasonable multiples. when the existing housing market on freezes, which it will, they will benefit and we will see that work for us. it's probably worth sniffing around in regional banks. there's been a lot of carnage there. they will probably have a tough road in the near future but the worst is probably behind them. romaine: we will have to leave it there and great to catch up with you and some great insight and recommendations for viewers. jeff muhlenkamp, continuing our coverage as we count you down to the fed meeting. the decision is at 2 p.m. in team surveillance will take the baton shortly after this program.

right here, we continue our coverage with richard saperstein at treasury partners coming up after the break right here on bloomberg. ♪ how am i going to find a doctor when i'm hallucinating? what about zocdoc? so many options. yeah, and dr. xichun even takes your sketchy insurance. xi-chun, xi-chun, xi-chun! you've got more options than you know. book now. you don't have to worry about things like changing tax rates or filing returns. avalarahhh ahhh

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romaine: welcome back to bloomberg markets. we came into this week knowing it would be more one of the more consequential weeks for financial markets and today we are at the inflection point with stocks and bonds getting battered all day long and we haven't even gotten to the fed meeting with the big decision at 2 p.m. washington time. the s&p was dragged by -- dragged down by disappointing earnings. the s&p 500 is moving lower as well as the big market cap is having outsized effects.

12 basis points lower on the two year yield and similar drops across the yield curve with a lot of that based on the big treasury refunding announcement we got this morning. the earnings we got earlier this morning, new york community bancorp, earning suggest a regional banking crisis is not quite resolved over all. deteriorating credit quality was the big deal but shares were down 36% and they were almost down 50% at one point. the regional bank indexes also moving lower as most of the community bancorp ears are seeing significant losses on the day. the earnings picture is in focus with rockwell automation disappointing on quite a few metrics, raising concerns about economic conditions particularly when it comes to the manufacturing space. look at boeing, the earnings report that actually disappointed on several metrics but the optimism now is about the commentary out of dave

calhoun, the ceo trying to do damage control, reassuring investors at the problems with the max9 jet can be resolved but resolved soon. we are less than 90 minutes away from the fed decision. many bloomberg guests are preparing for hints on the rate cuts priced into this market. >> what the fed will do today is open a door but basically tell us and hasn't decided when it will walk through. >> you are looking at a coin flip for march in terms of rate cuts. i don't think he wants to surprise the market on either side. historically, the fed likes to surprise with cuts, not with hikes. >> we actually expect inflation to slow to the target of 2% but settle around 3%. >> whenever they start cutting, that will have some constraint on how much you can cut for the year. romaine: some of the great guess we've had on bloomberg television today and another great guess to joining us now, richard saperstein at treasury

partners with decades of experience on wall street. cots is all anybody talks about. jay powell doesn't want us talking about it but he has to address it. they've got to put out a statement that at least provides a hint of maybe what they might do. do you think we will get that? >> we are in three or four phases of the cycle where it started in 08 with the zero interest rate policy and in march 22, it ended with a tightening cycle and now we are in the third phase which is the monitoring cycle. that began in the third quarter of last year. we expect that to continue right through the third quarter of this year with no cuts and what that means for investors is that we should be looking at extending bond maturities prior to rates going lower. irrespective of the language that comes out today, boots on the ground people, we are extending maturities. romaine: is there any doubt in

your mind that rates will be lower at some point this year? >> know, because i think the bite of fed tightening is still occurring with declining leading economic indicators and cre loans. there is a lot of problems. the economy should slow and the slowing economy will get the fed to accommodate and rates will go lower this year. romaine: will that be enough or too little too late? >> we have a very robust labor market. there is to 1.4 jobs available for everyone unemployed worker as compared to the peak of 2 in the average since 2000 of .7 so the labor market is robust, inflation is coming down and i think the economy sustains a self it has a slowing bias. romaine: also wage gains are robust. we got the monthly labor market report. jay powell has been obsessing over this. are the wage gains concerning to

you from an investor perspective? they are elevated but it seems given how far the inflation rate has come down, it seems we can live with that. >> the wage gains are growing at a slowing pace. i don't really find it too much of a risk at this point. i think the tail risk right now will be some supply chain shortages as a result of the red sea issues, the hot wars going on, that's what could cause inflation to temporarily spike. the directions lower inflation. romaine: when you consider how far we've come from 9% when you look at the core numbers and how far they have come closer to the feds target but we are not there yet, do we give the fred credit for that test the fed credit for that? >> we give the fed credit for not tightening and ending qe sooner.

in q1, inflation cpi average in the 8's in the fed didn't do anything until march. at this point, we applaud the fed for the 18 month tightening campaign, moving the rates back up to 5%. the biggest mistake that could occur at this point is premature accommodation. the fed cuts and all of a sudden you get a temporary spike in inflation and now there's more volatility for the market. that would be the biggest risk. romaine: financial conditions look relatively loose. >> yeah, there is to liquidity in the system and there is corporate debt being issued. what we really have to focus on is qt which isn't getting mention too much. as liquidity starts to dry up in the system, then we will start seeing the fed talk about cutting back on qt, the 60

billion per month they are letting roll off. romaine: just slowing the pace of the runoff? >> slowing it. the issue is last year, the federal government spent 6.2 trillion dollars but only took in 4.8. they basically overspent by $1.4 trillion. they had to issue and that will continue into the future. at the same time, the fed is letting $60 billion per month roll off and treasuries. both of those amounts have to be re-this year. that's one of the risks as a bond market investor in that the supply requires higher rates. romaine: when you look at portfolio allocation not just for someone like you who is married to the fixed income space. is there a case to be overweight fixed income based on the predictions most people have for fed rates this year? >> for our clients, return of

capital is more important than return on capital. we look at stocks, bonds and hedged investments. we are maintaining roughly 40% allocation on fixed income, 40-50% in equity and a small allocation to what we will call hedged investments. it's important to maintain an equity exposure here. romaine: we will have to leave it there but thanks for being with us. we are get -- getting close the fed decision at 2 p.m. washington time. coming up, closer look at paramount with shares surging today. the media mogul is offering at least $14 billion to buy out the company. that's the stock of the hour coming up next. this is bloomberg. ♪

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♪ romaine: welcome back to bloomberg markets. we are awaiting the fed decision at 2 p.m. washington time, a lot of non-fed stories moving the market. we are keeping and i a new york community bancorp. they purchase deposits from signature bank last year and they are falling as much is 45% after reporting a surprise loss for the fourth order in a cut to his dividend. it lowered its quarterly payout to five cents. the company is talking about big deterioration in credit quality. let's take a look at boeing, it suspended its financial guidance for 2024, sending the message that's focused on addressing the string of quality issues and investors like what they heard. the report took a backseat to

the latest 737 max crimes debt crisis. fourth-quarter earnings cash flow and earnings surpassed analyst expectations and those shares have been having a decent day, up 6%. mastercard shares are up by about 1% and earnings are beating analyst forecast even as operating expenses grew more than expected. the ceo at mastercard's as u.s. consumer spending on the company's cards is continuing to perform well. he mentions wider adoption contactless transactions as a growth opportunity. let's turn our attention to the big german apparel company. it's providing a forecast for the full year. it's as operating profit for 2024 is going to be about 500 million euros which is less than half of what the street was expecting. they were looking for 1.27 million euros. they expect sales to be flat in

2024 and nike shares are taking a huge leg lower on the back of that news and seeing weakness on the day as well as under armour and lululemon. everyone is so focused right now on consumer spending. a lot of folks are focused right now on media consolidation when it comes to the streaming space and that brings us to our stock of the hour. byron allen has extended yet another multibillion-dollar takeover offer and this time it's a $14.3 billion bid to buy the outstanding shares of paramount global. that's a 15% premature recent trade prices but it's unclear how he will pay for this takeover and whether paramount would be receptive. he recently made bids to buy several script stations and disney's abc network. our media analyst joins us now for more on that. we know paramount is on the block and we know there is a lot of people kicking the tires. how much credence do you get to

the reports about the offer from byron allen? >> not a whole lot of credence but i think what it definitely does is it forces other bidders, other serious suitors to come out and make bids for the whole company. what we've seen is sky dance owned by david ellison which is kicking the tires but they've only been looking to acquire a stake in the controlling shareholder or parent company of paramount which is national amusements. it's not paramount itself so i think this bid by byron allen really forces the other bidders to come out and show their cards. romaine: it raises a question about what bidders want from paramount. what is attractive here? >> the studio, by all means. this is one of the most iconic studios in hollywood. it has some great ip and a great library of film and tv series

titles. you have some great content production capabilities and this is an asset that throws off about $1 billion in eva dosso huge cash generation capabilities for the studio asset so that's something i think any streamer would want. i think that's what paramount has been betting on. the other part of the business which is the linear tv network business, this is the business that byron allen seems to be really interested in. this is a business that generates a lot of cash. use to throw off about six -- 16 billion dollars -- about $6 billion but it will go down to 4 billion next year. this is an asset that is in secular decline. cord cutting is depressing that whole business significantly. romaine: i've interviewed byron a lot and he is all in on the linear live tv when it comes to news and sports and locals.

is there any scenario where redstone and national amusements would consider may be selling off parts of this? maybe a byron took the media side of the business and maybe the studio side of the business, is that something that is realistic? >> i think it's very realistic. one of the things i think investors have really worried about with the paramount asset is the studio part of it is attractive but nobody definitely wants the linear network portion. if amazon or apple were interested, they would want the studio but what will they do with dying linear tv networks? this deal makes sense in that respect. the math makes a lot of sense. it's a 50% premium and you look at the multiples and paramount is trading at nine.5 times ebi ta. the deal definitely makes good financial sense as well. romaine: however this shakes

out, when we look at paramount and its place in the streaming universe which is the television universe if you will, what is there a spot? >> as companies have made this pivot from linear tv to direct to consumer, paramount is a little subscale. they have 60 millions per streamers but that's just not enough. netflix as 260 million, disney close to $200 million. -- 200 million viewers. they need to consolidate and they are having suggestions for them to shatter their streaming business and become a content arms dealer. romaine: thank you so much with a look at one of the big mover is on the day, paramount shares up as much as 15% and now up about nine on the back of that report that byron allen is considering a $14 billion bid for the company. coming up, stick with us khmer

fed countdown coverage continues. i will be joined by phoebe white as we are near a session low on the s&p 500 as well as on the nasdaq. wti crude is also moving lower on the back of concerns about demand conditions. stick with us, this is bloomberg. ♪ the first time you made a sale online with godaddy was also the first time you heard of a town named dinosaur, colorado. we just got an order from dinosaur, colorado. start an easy to build, powerful website for free with a partner that always puts you first. start for free at godaddy.com

>> my gut is they will cut rates but the question is will they do it as quickly and as deeply as the market wants? that is hard to say but i think the direction of travel is pretty clear because there is good news on the inflation front. romaine: that was the president and ceo at blackstone speaking to us last week about what he expects from the fed this week. that decision is coming in just about one hour's time.

this is bloomberg markets. our next guest has already repriced the fed easing over the past few weeks given the strong economic data and a relatively hawkish fed speed. phoebe white is head of u.s. inflation strategy at jp morgan securities, great to see you. i don't think there is any mystery here. there is no one out there who doesn't think we will see rate cuts of some proportion at some point in the year. wind of those rate cuts start and how many of them do we get? >> i think it's pretty clear and jay powell made it clear in december that we are done with tightening next move should be a cut. it's a question of timing. we think march is probably too soon. i think that cut will be in june. there is a lot of moving pieces here and there will be a lot of focus on the inflation data over the next few months on the labor market data because the fed wants to feel comfortable that

inflation is moving sustainably toward the 2% target. romaine: do you think it's moving sustainably toward that? >> i think the data over the next couple of months will be consistent with that message. there have been big divergences in the different inflation measures out there focused on the fact that core cpi inflation has been running higher than the fed's official measure of course he dep at we look beneath the surface, there are many reasons to expect even core cpi inflation will start to step down over the next few months giving the fed more confidence that 2% is more sustainable. romaine: this is really the inflection point where i feel this is a harder decision than when they first started the rate hikes a year and a half ago or when you look back as to the path of rate hiking and cutting the reasons why those cycles were brought to an end here, is there more clarity in this cycle

relative to what we saw in past cycles that would give the fed and easier way to make that decision? >> in many ways, it's more difficult. typically we start to see more softening in the data after years of recession that really pull forward the timing of that first cut. at this point, the fed has achieved a soft landing if you look at the data over the last six months. core pce inflation is coming in close to 2% in the last six months. even with growth coming in strongly above trend, and labor markets are still very tight by many measures. unemployment rate is still under 4% so there is some reason maybe to be concerned of wage inflation one keep coming down and we can have the re-acceleration of inflation. that's part of the reason they are cautious. they don't want to ease too early and risk the inflation coming back. romaine: the fed decision is about one hour and five minutes away. that statement will be poured

over and nausea and but more importantly would be the press conference at 2:30 p.m. and how jay powell answers the questions. it will be about when you cut rates and why haven't you done it already. if you were in that room, what would you ask? what is your number one question? >> i would really want a better understanding of how worried they are about inflation picking up again. it will be really interesting to see how they are reading the inflation data. i think they will want to acknowledge the progress that has been made so i think they will talk about progress on things like three-month and six-month run rates. if you look at the 12 month rate of inflation, still decently above target on core pce close to 3%. i think that's a reason to be cautious but it will be interesting him as they focus on that. romaine: phoebe white there, head of u.s. inflation strategy at jp morgan securities.

i'm sure she's got a lot of work ahead of her with the fed decision in about one hour and five minutes. the market continues to oscillate less around the fed but more around the disappointing earnings we got over the last 24 hours. the nasdaq composite is down more than 1% on the day in the s&p down about 0.8%. the dow is one of the few bright spots, up by about one -- 0.1%. people are keeping an eye on yields of the 10 year yield is back below the 4% level. that's more about the treasury and its more about the earnings we got out of new york community bancorp. the dollar is in a holding pattern as is the vix. we are counting you down to that fed meeting. this is bloomberg markets and that does it for me for now but i will be back. i will pass the baton over in half an hour's time to team surveillance with lisa abramowicz, annmarie hordern and jonathan ferro will have full

coverage starting at 1:30 p.m. from new york, a huge slate of guess they have lined up. -- of guests they have lined up. a great lineup to break down the fed statement and give you a read of what comes next. sick with us, this is bloomberg. ♪

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