support the case for higher rates. ahead of the open, 10 seconds away, i have futures lower here. dax futures are higher, up by 28 points. the beginning of a long trading day. let's get things kicked off. ? a third day of gains. caution ahead of that rate decision. to hike? or not to hike back the question on everyone's minds. to annoy six-year fans. the ftse up .3%. as you said it, economists divided down the middle. defense future fun rates seem to be signaling and 32% chance we could see a rate hike. stocks tentatively up in europe. up by one basis point.

two-year yields at the highest since 2011. the bull market is ready for the fed to hike, whether it is today or sometime this year. yields rising across the board. meanwhile, focus and on the dollar. it is currently lower. off by .1%. don't forget, it is not the only rate decision today. keep the eye -- keep your eye on the swissie. basically flat. remember, swiss franc's unlikely to be a change at the swiss national bank. surprised growth has been effecting the swiss economy. the swiss franc is near an eight low. taking the pressure off, helping to boost the economy. negative inflation is going to hold thomas jordan's fire. percentikely to see the

remain. let's take a look at how the commodity spectrum is looking. oil, back. we have seen it move higher, spiking higher on the back of inventory. let's have a look at the today chart. it is risen significantly. keep an eye on copper today. i want to focus in on that after the tragic story that has been affecting chilly -- that has been affecting chile. there was worry about the supply after that massive earthquake. they have been comments of -- comments coming from the minors. they say they have not been affected by the overall issue in chile. safe.uake workers are

cablevision, i will be talking about that deal. meanwhile, julius owner of up to people liking the fact they're sticking close to home in the nordic region. jonathan: thank you very much. we seem to be trading sideways. the ftse 100 up. is this the calm before the storm? let's get over to shery ahn. shery: good morning. another dramatic day for chinese stocks here in the last 15 minutes. the shanghai composite report -- reversing gains. volatility is at its highest since 1997. we're seeing the shanghai composite finishing down. the hang seng still has one hour to go. 6/10ng to -- trading

above. yesterday we saw that late surge in training. the shanghai composite finishing down. up 1.4%.ishing lower volumes today, ahead of that fed decision. we had trade data out of japan showing exports growing slow. growing in new zealand. stocks are rising .5%. the economy expanded less than expected. malaysia surging today, gaining 2%. we have oil prices overnight gaining. largest oilasia's exporter. they have seen gains. beateng it has taken a that's has taking -- has taken a

beating. gaining for the past three sessions. we are seeing some weakness across asian currencies. organ sammy saying they are saying-- morgan stanley the rupiah is the most attractive currencies. back to you, john. jonathan: enjoy your afternoon in hong kong. that is the picture for asia and europe. here is what is coming up. craig elio speaks to bloomberg and it exclusive interview. what you can awake at night. later in the show, we will hear from the swiss national bank. plus the big corporate news. provider is cable buying cablevision at quite a

premium. details next. ♪ you don't need me to tell you that it is bad day. who better to talk to than the man with the biggest hedge fund, rate down the. he spoke -- ray elio. rate: i don't care if they raise 25 basis points. i don't see the reason for. 2007, i was watching this incredible bubble happen. it was an asset bubble. it was a finance on a lot of debt. the fed gave attention to the gdp gap. they missed the whole bubble. we had a collapse. now we have situation where we are in the new part of the cycle. they're try to identify where the inflation is. we have a lot of liquidity around.

when i look at this, there are little glimmers here and there. basically, i think they are worried too much about the short-term of the cycle and not enough about the long-term debt cycle. i don't get it, given the asymmetrical risks. where should we be? we are in a world economy. ray dalio, tune into bloomberg today for our special report on the fed. time.cision at 7:00 u.k. janet yellen will take to the podium, 13 minutes later. bottom line, there is no consensus heading into the fed decision today. ray dalio says do not go. is it a case of goodbye september and hello december? let's bring in our guest, michael metcalfe.

he joins us this morning. great to have you with us. should we strip things back to basics? go back to the last fed statement and pick up these two lines? we need further improvement in go backets? we need to to target? michael: no. one important point is we should not forget the labor market is unambiguous, the signals they are giving. we talked about it should not just be the unemployment rate. are at thearket non-accelerating rate. employmentre of full . the unemployment rate on its own doesn't justify an emergency policy. it doesn't justify easing policy. i think it is very unambiguous. inflation, it is a lot harder.

headline inflation very weak as we know. one of the things we catch, we look at online prices. we can see they are declining quickly this month here at that is a concern. we see it is all energy. headline inflation ok. core inflation, could be a little higher. not a massive problem. inflation expectations. very interesting. we need to focus on the five-year expectations. they are very low. they are at a level that is concerning. it is interesting that the feds are talking about inflation compensation. not necessarily inflation expectation. if you look in things like the inflation expectation in the university michigan -- it went up.

here you have a situation where the unemployment -- the labor market is pretty unambiguous. the signal from the unappointed side is so strong, and needs to tighten. -- it needs to tighten. jonathan: one of the bad points is the financial tightening we have already seen. three 425 basis point hike. did we had that already echo is that the other data point the fed looks at? michael: the person they like to listen to is from the new york fed. he is talking about financial conditions. dictating the pace at which they will tighten. there is no doubt we've had a lot of the feds on measures that financial conditions have tightened significantly as well. there is stress they will take -- that they will pay attention to that. they still need to tighten

rates. there is a reflectivity between the feds and the market. , the fedsl bubble cannot respond to that. talk about central bank independence. we think about central bank independence from politicians, but what about market influence? there is the element too. say is thing i would that the medication strategy has failed -- is that fed communication strategy has failed. we have been waiting to tighten for so long. i've been doing this for 20 years. i cannot remember the market analysts, investors, being subdivided. jonathan: i want to jump on that point it at six years, 50 medication has been about transparency. is that not right? michael: the

fed also can mitigates -- the fed also communicates -- the fed can only go if the market is fully priced. the market is fully price for december. one interesting point is the fed's been saying the starting date does not matter. what matters is the shape of the tightening cycle. jonathan: what matters is the journey. are we going to write a headline tomorrow morning that says dovish rate hike from the fed since stocks surging? is that the headline? michael: i hope so. one of the reasons for thinking if the fed goes today, they get rid of all of the uncertainty. if they don't, we're going to be on data watch again.

we are going to be thinking a lot about where is the probability for september was near 50% not too long ago. i even get there in december. to remove that doubt. a number of emerging markets saying exactly that. how odd is that? in the middle crisis, that's in the mid--- in the middle of a crisis. up, the fedming impact on emerging markets. will they benefit? or take a beating? we had to hong kong after the break. -- we had to hong kong after the break. ♪

>> i do believe the fed is not going to hike interest rates, but there will be a rate hike in december. >> it seems to me they put themselves in the best possible solution. nobody said that we would be discovering something that is entirely new. >> let's do it now and we will hold our breath.

if you don't know that you have room to raise it for a wild, why >> the starting out? domestic case for raising rates is solid. it has been for a while. they should have moved when both domestic and international -- were aligned. >> are the conditions facing the u.s. economy the objective of inflation, -- show the criteria. >> the reaction is going to be mild. i am talking about the united states. >> this is much more psychological. it is much more about setting precedent. if the u.s. economy is in normal shape, 25 basis point should not matter that much. don't, then the narrative about why they don't.

>> i don't think they should a trickle out hike, because they want to start hiking. i think it would be poor judgment. >> if things go badly in the rest of the world, financial conditions will intensify from here. in that case, that will be a reasonable case to push it into 2016. simon: it is fed day -- jonathan: it is that day. economists are split on whether the fed will end seven years of near zero interest. mark carney says there is a chance interest rates will need to increase. >> my view is if the economy. decision will come at the end of the year. jonathan: the deal

values the u.s. cable tv and $17.7et provider at billion. finally, the second republican presidential debate shifted from policy to the personal and back again. the more politically experienced candidates try to gain an advantage against donald trump. >> i think there is a sophomoric quality that is entertaining about mr. trump. aboutncerned about him having him in charge of nuclear weapons. appearance,ople on my goodness, that happened in junior high. are we not above that? are we not worried to have someone like that in charge of nuclear weapons? >> i never attacked him on his looks, and believe me there is plenty of subject matter right there.

jonathan: the world economy, back to the fed. the world economy is about to get stress tested. shiftingout to see the of the u.s. monetary policy. let's talk emerging markets. they could be vulnerable. question what does it mean for europe? what is a need for asia? malcolm: some of the bigger asian economies may look more youlient than otherwise might imagine. japan, a fed move should mean a stronger u.s. dollar, weaker yen. that's to be good for exporters. for india and for china, those economies are still growing that he quickly, so they may be able to shake off some of the downside. the smaller economies may be more exposed according to our bloomberg intelligence economists.

vulnerable to any swings. they look at malaysia, indonesia, some of their debt vulnerabilities suggesting there could be some wobble there. among -- among some of the highest foreign ownership of their sovereign debt. lookingr little economy pretty good is the philippines. .ome strong flows economy is doing pretty well. there is a variation and outlooks. one thing to note, the region has done ok when it is priced in. case in 2014 two 2006. asia has sold off a bit in advance. it did ok throughout the tightening cycle. no one could say this was a surprise if there was a move later today. jonathan: we've spent a lot of time talking about china.

when the official said around the table, what are the officials and their decision mean for china? malcolm: china grabbed all of the headlines last month. it actually may be one of the more resilient to any fed rate rise. there are about 3.6 trillion in the bank there. thatalso got many levers many other economies don't. retained capital control, even though there opened by the day. exits.ill can shut any they still have a lot of control over the yuan as well. to have you with us. thank you very much for joining us. we are back with michael metcalfe. i bumped into blackrock this morning. me of 2013.reminds everyone was building up to this

-- they held off until december. emerging markets carried off trending lower. barked was inever this balance sheet issue. is it that going to happen this time around? didn't in2013 -- it 2013. iscolm: the external debt the thing that worries us the most. -- one thing i would say investors are far better prepared for a fed rate hike then they have been for a long time. if we look at how investors are they ared to emerge -- already underway. they have been ready for this bad news. when you look at prices. e.m. currency has sold off

significantly. and has been for several years. the point about investors is ok. the court balance sheet is prepared for what may come -- the corporate balance sheet is prepared for what may come? michael: i think it depends on how well the dollar is priced. it is not about the first move. it is about how far the rate will go up. drawsd titans and it capitalists out of the markets. tightening tod is a mixed economy and the u.s. yields don't go above the percent? -- go above the percent? 3%? is possible -- go above

in very weakriced global growth. some numbers are rolling over. ready, because of the temper tantrum. jonathan: things here at becauseg are difficult we have to touch the pension holders and day traders. i'm sitting at my screen tonight and you are going to be the day trader for me. the headline drops. i know there is no consensus between economists, he investors, strategists and the like. is it bearish? bullish? how do we know echo -- how do we ?now that g michael: the reaction in the near-term is unclear. one thing that could happen

would be to say they would hike and they are very dovish and they collapse. you're going to get immediate reaction. in the near term it is only 30% priced. there will be a small risk-averse reaction to that. we start to focus on the fact that the fed has revised their projection for next year. that should cushion any negative impact on risks. maybe even limit the benefit for the dollar. jonathan: we have 10 seconds left or -- sit left -- will they? or won't they? michael: they will. jonathan: michael metcalfe, thank you for joining us. fx ahead ofe talk the fed decision. let's get a check on the markets

. 26 minutes into the trading session. the ftse 100 creeping back into the green. the dax trading higher. we're trending sideways into a decision. where are we? 12 hours away. ♪ sure, tv has evolved over the years.

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call 800-501-6000 to switch today. perks are nice. but the best thing you can give your business is comcast business. comcast business. built for business. jonathan: good morning. welcome back to bloomberg tv. i am jonathan ferro, live from bloomberg's european headquarters. the federal reserve not the only decision. there is a decision over in switzerland. let's get the smb decision with caroline hyde. caroline: it looks like the numbers have been coming in. we see them holding their lower bands. that is -1.25%. holding rate still as well. record low, minus three quarters of a percent. leeway, a little bit of

because the economy is starting to be a bright spot in surprise growth in this economy. we're starting to see some element of combing -- element ofc calming. let's see how the swiss franc is performing today. with the euro down, swiss bank rallying versus the euro. and little bit of a move there as we are seeing no change to the rate. euro dropping versus swiss franc. remember, what a significant move we have seen over the last few months. starting to see a move in the swiss franc as has been noted. a little bit of a strengthening against the euro. jonathan: euro swiss pushing back to 1.10. that has done the s&p a couple of favors. snb a couple of favors.

they maintain they will remain active in the fx markets. snb.problems still for the federal reserve decision later this evening. dalia has urged the fed not to raise rates. here are some of his reasons. do you think qe works? ray: it is going to work a lot less. i am saying that we cannot have term rate rise for the structure. what the dis-inflationary pressures exist around. we will have a downturn. the downturn should be worrisome because we don't have these spreads asset prices. qe, whether it will work.

qe is the purchase of those assets to get those premiums up. when you keep pushing, if there is not an attractive investment relative to the bots, the spread is going to drive that. if there is not much spread in something else, then you get less effective monetary policy. >> are we there? ray: we are not there yet. we're closer. some countries, europe is there. >> they are pushing on a string? what are happens is you going to buy in the way of bonds at negative interest rates? very, very close to there. that's why you need more currency depreciation. the effectiveness in japan is there. the effectiveness of monetary policy easing comes through the currency.

when the person who is receiving the cash for selling their bonds has to do something, it is -- if they are in different between cash, there is a pressure to move it up to the country. if you look at us, we have very high rates in the world, in comparison to those in europe and japan. it comes through the currency. you have to have currency moves. that's why that is the environment we are in. jonathan: let's talk about the currency moves. what will the fed decision mean for the dollar? most traders bet the fed will not trade that's what not raise rates -- the fed will not raise rates today. we are not going to let him forget that. chris, great to have you with us. the events of tonight, do we reignite the dollar bull market? it fizzled out i can the spring. chris: would like to think so.

-- we would like to think so. the short end of the curve is going to underprice for tighter that condition. we have seen to yields above .8%. we think there is a lot more to go at the short end of the yield curve. that's a be good for the dollar. that's that should be good for the dollar. -- that should be good for the dollar. why is history not a lesson for what is going to happen this time? chris: we are in a completely new environment with a huge period of qe. huge liquidity. qe, who on the planet is prepared to accept the

stronger currency right now? thehe fed has come to point, either there compared to accept monetary conditions -- sign jonathan: -- its thing you should say october. many have predicted that. chris: it is like a hawkish hold. further room for those short rates to rise. which would be perfect for the dollar. 7:00 p.m., you are the daytrader. the headline drops. this time, it says low height, what are you doing -- it says low hike, what are you doing? comes if the decision about a move in october, i think the euro-dollar will end the day

lower. if you have done the pricing in the last 12 months, it should be closer to 1.11. compare with the -- acting up -- if the fed stays on hold, does that increase the likelihood that the boj makes a qe1 hasn'tober 30? finished and they're already flagging the possibility of qe2. ecb, iin regard to the think they are more likely to move. casas, the in his is expectation that the u.s. rates will be rising at some point. they are sensitive to the currency. were the euro-dollar were to trade above 1.15, that would increase the chance for ecb.

chris turner, great to have you on. thank you for joining us. a quick check in on currency markets. , a little bitex weaker ahead of the fed decision. down .2%. dollar yen down. zero, what you find a story euro. cable, 1.55 flat. fed decision later today. let's talk commodity markets. the 120 day correlation between the bti and the u.s. dollar index moved in zero last week. will kennedy joins us now. well, is it by magic you appear next to me? talk to me about this breakdown in correlation.

what has caused the breakdown? well: it is been one of the main u.s. -- that put pressure on the account deficit. a lot less oil. that's made the relationship more erratic. we have seen the correlation go. jonathan: what commodities may or may not do. we were looking at last week is the goldman sachs call. volumeep turning up the on bearish crude. -- will: russia can continue to. pump -- all ofo

this shale oil in america. jonathan: yes we bang on about reductiont, but total -- total production in the u.s. has not rolled over. will: even if it does it can come back quickly. the rigs go, oil goes back to 70. will kennedy, great to have you on the show. coming up, crack in the u.s. market. the purchase of america's cablevision. details after the break. ♪

>> we will have a downturn which should be worrisome, because we do not have the spread. qe, whether you are asking if it will work. the qe is the purchase of those assets to get those names up. when you keep pushing more bonds, if there is not an attractive investment relative to bonds did the spread is what is going to drive that. if there is not much spread, you get much less effective monetary policy. jonathan: it is fed decision day. policymakers will way the u.s.

outlook. economists are split on whether the fed will and seven years of near zero interest rates. the bank of england also considering a rate hike in the near future. governor mark carney says there's a chance interest rates may need to increase from a record low and 2016. -- record low in 2016. a decision will come into sharper view at the end of the year. jonathan: at least three people died in the 8.3 magnitude earthquake that hit north chile. waves triggered by the quake washed ashore. the president says the government is assessing damage

and wants of the potential for strong aftershocks. the second republican debate shifted from policy to personal. the more politically experienced candidates try to gain advantage against mr. donald trump. >> i think there is a sophomore quality that is entertaining about donald trump. i'm concerned about having him in charge of a nuclear weapon, to attacks response people on their parents, short, tall, fat, ugly, my goodness, that happened in junior high. are we not above that? are not all of you worried to have someone like that in charge ? >> i never attacked him on his looks, and believe me there is plenty of subject matter. jonathan: 45 minutes into the trading session. let's get up to speed on the equity markets. some of the top stock movers with caroline hyde. turco the u.k. base stock.

the sexy world of about controls. the move is down 15%. this is one of the worst days since 2000. profit warnings. trade will be challenging. their revenues will be below estimates. ubs is saying these oil and gas is our negative development. meanwhile, let's focus on the green. liasonera is up 3%. tweet me. how do we say it? .t plans to exit asia it plans to get out of the ex soviet countries. it plans to focus on home. at one point was up 12%.

that was a record move. the cable operator here in europe going for u.s. assets. jonathan: talk me through that. altice splashing the cash. what are the intricacies of that deal? caroline: splashing the cash is part of that. it is a 22% premium. this is one of the top five players in the cable market in the u.s.. value.illion enterprise feelss how much out this cablevision is worth. office is paying $3.3 billion of its own cash. -- out this is paying 3.3 billion of its own cash. we saw the move for cablevision yesterday. there was a spike in after-hours trading. living 70% once we got the news

out -- leaping 17% once we got the news out. at why they look are setting their sights across the atlantic. this is the second deal for him, creating the fourth largest cable operator in the u.s. sudden link at the deal he made back in may of -- may. added with a $9 billion deal. subscribers, still small fry compared to other players in the u.s.. directv, 20 million users. the consolidation trend is the same. why are we seeing him in a happening? m&abillion dollars worth of . largely coming from the u.s..

the amount of competition. you have the weakest on the block. you have ethics, amazon five -- you have netflix, amazon five. it is hurting cable and satellite providers. they had their worst quarter in terms of some -- in terms of the scriber losses last quarter. everyone is jumping ship to new players. a combined and consolidate. their subscriber revenues are being hit. another billionaire that he tries to nap assets off, john malone. remember the squabble for time warner. they were bidding for the same assets. time warner of course one of the biggest deals. massive onslaught of

deals. it is nice to see european players getting into the field. jonathan: coming up, we look ahead to that federal reserve decision. ray dalio says don't go. economists are completely divided. ♪

what thecares me is next downturn in the economy looks like without prices where the are. the lesser ability of central banks to ease monetary policy. >> some -- we have some ammunition. you some acute disagree? >> again, it is a restrictive policy. i don't care if they raise 25 basis points. i don't see the reason for it, frankly. jonathan: ray dalio. -- tune in to bloomberg throughout the day. our special report on the fed decision at 7 p.m. u.k. time. janet yellen will take to the podium 30 minutes later. that is a most it for this hour

of bloomberg tv. i am pleased to tell you that the pulse is coming up next. we are joined by francine lacqua. speaking withre global investors. he has been on the show regularly. he focused on dividends, he things the fed should go as early as today. deborah's vacation and alternative asset classes are relevant. -- he says that diversification and alternative asset classes are relevant. we also getting at what a fed rate hike means for england. jonathan: inflation is nowhere to be seen. we have a governor who is saying is close. very similar. francine: the fact they are saying it is coming. we are close.

they almost tighten the monetary conditions by saying that. the parallels are undeniable that the u.k. is so much smaller. you know they don't want to go first. coming up? .rancine: blah cars we do not hear about them five or six years ago. app. a car sharing jonathan: some of these valuations, uber, blah blah cars. i can't keep up. let's take a peek at the equity markets. the ftse 100 is trading that flat for the first 60 minutes. down by .1%. down by three points. switch of the boards.

the fx markets. how we are trading ahead of the fed, the euro a stronger euro. cable almost $1.55 flat. that is it for me. if you want to talk about markets, i am on twitter. best of luck for the rest of your very long trading day. ♪

francine: will janet yellen go for the first rate hike since 2006? surveyed byts bloomberg respect the fed to stay on hold. but markets are vulnerable because no one knows what is about to happen. that -- heells us does not support the case. he's worried about the next economic downturn. welcome to "the pulse." live from