scarlet: good afternoon. i am scarlet fu. i am out still. willis said rate hike come down at 2:00 p.m.? probably not, but there is much to discuss while the watch and wait. scarlet: anchors may not find hillary comments laughable. what is underneath those chinese fourth-quarter numbers? scarlet: we have got to start things off with today's market activity. for that, i went to head over to bloomberg's julie hyman at the market desperate we are at the height of the session. ahead seeing stocks rally of the fed statements. i'm not going to call it a decision because there is not much suspense going on there .ould als

also on the back of better estimated earnings reports and the rise of the energy conference. all major average arising. let us look at the individual stocks that are contributing the most of the gains at the moment. we have apple rising after its numbers came in ahead of estimates and dispelling pessimism from critics going into the report. mark rises for the second days on positive results related to a lung cancer treatment. exxon mobil rising along with oil prices. and then there is the fed. take a look at my bloomberg what calculus the probability that traders are pricing into the market based on fed funds future. only a 4% move -- a 4% likely head of a move. to 43% in january and about 60% now for the march meeting. yesterday,er said find me those people who are pricing in the 4% length. they are not looking at

the news apparently. what is interesting is that if you look in the divergence in yields between new york and here, we are continuing to see a rally on the tenure. your notes over in europe, italy turned negative yesterday for the first time. there is this divergence. julie: divergence between europe and other central banks around the world between the easing track and the amount using track. i do not think we can call it tightening here. it is just non-easing. if you look at the 10 year note here, we are seeing a little bit of a bump in yields at 2.60%. it is a pretty depressed level overall to what we have seen historically good take a look at the dollar as well and what is going into the fed meeting. if you look at the dollar index, we have it down a little bit today at two tens of 1%. not big moves either in rates or and currencies going into the fed. finally, if you take a look at what is going on and commodities today, we do have oil prices getting a lift after we saw

inventories of gasoline falling and consumption in the u.s. rising for the third week in a row. told futures are rising also, but this more has to do with the fed and the outlook for rates staying lower for longer and copper futures getting a little bit of a boost, up about a third of a percent. scarlet: we will be checking in with you once again on specific coming movers. alix: for now, let's check in on the bloomberg first were news and mark richt and has more from our news desk. mark: former speaker of the u.s. house dennis hastert has pleaded guilty to lying to the fbi. prosecutors are asking for a six-month prison sentence as part of his plea deal for the hush money case. pastor entered the plea in federal court in chicago this morning. the 73-year-old republican is someoneup paying $3.5 million after claims of sexual misconduct. he will be sentenced in february. the house is inspected to pass a budget bill that will end fights

over domestic spending and borrowing for early 2017. republicans have raised questions about whether the $80 billion in spending increases will be offset by cuts and other revenue. state lawmakers are unhappy that crop instruments payments will be cut. paul ryan, the incoming speaker, says that even though he thinks the whole process in his word "stinks," he will support the bill. expectedublicans are to nominate mr. ryan as their new speaker. public and presidential candidates will face off to my for the first time since ben carson climbed to the top of the polls. like the previous two debates, this will be a two-stage event. takeeading candidates will the stage in prime time at the university of colorado. an earlier forum will feature inr candidates lacking the polls. we will bring you a one-hour preview live from boulder. it's a special edition of "with all due respect" this afternoon at 5:00 p.m. new york time.

nigeria's military says it has freed 338 people in rates on boko haram cans in the country's northeast. -- cap'she captains were children and women. 30 members of the islamic extremist route were killed. by jerian troops have rescued hundreds of boko haram cap does this year, but none of them more than 200 girls kidnapped from a school in april last year. for the first time, iran will take part in talks about the syrian crisis. iran accepted an invitation to join leaders from the u.s., russia, and the european union this week in the end. like russia, iran supports the syrian president. the u.s. condemns iran's role in syria civil war, but american officials admit that iran is needed to work out a political solution. and that is a look at our first were news right now. you can always find the latest news on bloomberg.com. back over to you. it is decision day for

the federal reserve and the latest fed funds futures as julie pointed out shows the on toa rate rays have dipped 4%, not exactly a strong endorsement of any kind of action. alix: what it shows is that janet yellen is really in a dilemma. on the one hand, you have this scares in developed markets mashed with high inflation in emerging markets. senior economics correspondent brendan greeley breaks it all down. describe this tight spot. brendan: it turns the internal can do something for you. they can graph sovereign yield curves. it is the expected future price of a country's debt. it is a proxy for a couple of things, mostly inflation and the expectation of future growth. here is the u.s., seemingly healthy, coming up over this 2% inflation target that all developed central banks have set for themselves. here's where we are in the developed world. germany not edging up above the zero bound for a while. we have also got sweden. the central banker of sweden told our jon ferro that he is

prepared to go even farther negative could these are the pressures right now. japan also, look at that yield dragging the u.s. down. obviously we can chase them down, but here's the problem. have emerging markets as well. janet yellen has commonly referred to as central banker of the world. she is not supposed to be, but she is. she has signaled that she is paying attention to the rest the world and the imf is begging hurt too. here is the u.s. again -- completely different and perspective to a couple of other countries. result has future growth /expectations in brazil. india set itself a target for inflation of 4%. they are well above it. same story with indignation here. -- indonesia. you have to pressures on the fed right now. the faster -- pressure to create inflation and growth is being dragged down looking to develop markets in japan and europe. it is being dragged up when she looks at the rest of the world. janet yellen is the central bank

of the world and i do not envy hurt in this task. scarlet: how to she bridge that? thisan greeley, how does dilemma play out inside of the federal reserve? and you saws us now what brandon just laid out for us. what is your take on this deflation versus inflation struggle? michael: for the u.s., globa; inflation should be down over time. what yellen and her crew will be focused on his domestic sources of inflation and potential future sources of inflation that are here domestically in particular, whether the labor marketing is tightening and a way that will put up pressure on wages and a time. that ultimately will be a lot more important in deliberations then inflation in the next year or two. alix: we hear all the dissent in the fed. who is looking at what kind of

inflation metric and who is looking at what kind of job metric? or 50 look at the past 30 years, the dissent that we have seen is not as great as it has been that we saw in the 1960's or 1970's. his all this hype not that big of a deal? michael: i think it's not that big a deal. dissent is something being encouraged right now. there is probably too much groupthink in the fed prior to the crisis. it is good to have independent views. i do not think we should see that as something that is a problem and we should probably get used to it. brendan: within this dissent that is not a problem, there was a lot of discussion of the phillips curve, this relationship that has always been true between unemployment and inflation. it does not seem to be working the way it has before. what language do you expect to hear from the fed in its statement or in the minutes later on about this new understanding of inflation? michael: for the statement, pay little change in how they describe the process of inflation. i would expect that in the

minutes that we will see a vigorous debate about this and we have seen it play out publicly. we know that janet yellen and fisher believe in the phillips curve. there have been a few dissenting voices saying that they may believe it, but it does not work like an engineering relationship you i expect that we will see more of that type of debate play out. the minutes that we will get in three weeks time. today's statement will probably play it safe and narrow and copy a lot of ins in the last statement. scarlet: peter fisher at black rock has argued that the fed cannot agree on whether zero interest rate policies are even working. they cannot take the next step of beginning to normalize interest rates. is that something that the fed needs to reach consensus on first before they can move? michael: i think there's probably a fair degree of consensus that it has worked in nursing the economy back to a degree of help here. think the issue here is more forward-looking. it is how are they threatening

or not the price stability mandate. right now, they have been running below. i think the question is not so much how zero interest rates have been effective. there's a little debate about that, but among that debate, i think there's generally a lot of the agreement there that zero interest rates have helped get the housing market and other aspects of the economy back on track. i think it is more looking for a bigger debate on the inflation outlook. brendan: with the zero interest rate policy, it a year ago, if anybody suggested negative rates with a way to go, you would've been left at the room. and now we have sweden telling us that they can go farther negative. you have active discussion of lower your interest rates in the u.s. from people at the fed. has this idea that would've been a joke 16 months ago become something within the realm of the conceivable for the u.s.? ishael: i'm not sure there

an active discussion at the fed on zero interest rate. we did see in september that they put in a negative forecast for the interest rate. janet yellen and her press conference pretty much dismissed that. that hehe keep in mind will be leaving in a few months time. of the say that for most committee, the vast majority of the committee, the prospects and what they are thinking about is how to raise rates and at what speed to raise rates. i do not think there is an active decision right now in lowering rates in the u.s.. really good raise a point because i feel like the more and more research i've been reading is that deutsche bank operations switch to its monetary policy. is it loose right now? is there concern about what you do with that roll up money as those treasuries that the fed has invested in mature. do you invest in the secondary market to help liquidity's? there is a confusion as how loose monetary policy is rented. can say looser but

we do not know what that is relative to. we have this metaphysical concept of the rate of interest, what is the real rate of interest. we do not know what it should be right now. i'm going to throw this back to michael. from the san francisco fed has taken the real rate of interest and put it at negative two points and -- new -2%. where would you put it right now? michael: i think there is a lot debate. you would have someone like yellen fighting research from john williams that would put that around 0% and -1%. there are others at the federal reserve staff that think it is more like 1% and one .5% positive. this is something where think opinions are pretty much all over the map in terms of what is a normal real interest rate. said aseven yellen has recently as september that where interest rates are now is below

normal. therefore, they are stimulative and have to move up over time. how much below normal, i think, is where there is not a whole lot of agreement right now. scarlet: the bottom line is that there is also no precedent for this kind of exit from stimulus. we have never been here before. there is no playbook for the fed to refer to. there is of course understandably a lot of angst surrounding it. what surprises you about how investors are pricing in this uncertainty, given the s&p 500 is within 2.5% of its record ish and the 10 year yield near 1.6%? michael: i do not find it all that surprising. the degree to which investors are pushing the feds credibility is somewhat surprising. as a trend economist, i believe they will get back more to their 2% target render. the 2% tenure rate that you fedion is the view that the will probably consistently under shooting their inflation target. that is interesting particularly because you have what is

perceived to be a pretty dovish committee and dovish leadership and that they are not going to get back to their efficient target. i would not say i totally disagree, but that is one aspect that sticks out in terms of how the market is factoring in the central bank right now. alix: what really sticks out is what the ecb is doing versus the fed versus the boj and sweden with quantitative easing could look at my bloomberg terminal and you can take a peek at what happened after the euro-dollar. that is what happened in the last few weeks. when the fed looks at that chart, what do they say? do they want a stronger dollar that is bracing and tightening versus the ecb? what does that do for the fed's decision-making? michael: i think they do not want a dramatically stronger dollar. one thing i would say is that we and financial markets focus heavily on euro-dollar. trade with europe is about 10%-50%of our oval --

of our overall traded there is trade with china and mexico. when we look at the trade overall rate with the dollar, it has been stable for 2.5 months now. it has been stable and other crosses, but when they look at the dollar, they are probably relatively what they have seen, is slowing of dramatic appreciation that we saw from the summer of last year through the beginning of this year. quick, does janet yellen have to act in relation to the ecb? if they are going down, that she have to stay where she is? michael: i do not necessarily think so. foughthing, the fed has more aggressive action on the ecb and boj because they are prices that need more aggressive action. just go back to the january minutes where after the ecb qe, people on the committee said that this is going to be good for the u.s. growth because it is taking out some of the downside risks are emanating from overseas. i'm not necessarily convinced

that more ecb action means that the fed cannot move later this year or early next year. alix: looking forward to it. 2:00 p.m. will be exciting for all the nitty-gritty details, even if we do not get any kind of move. thank you very much michael and our own brendan greeley. scarlet: senior economics correspondent. alix: those are cool complicated charts that we did. scarlet: you have to tweak that out later. at programming note. we will have live coverage of today's fed decision with mark crumpton, tom keene, and kathleen hays at 2:00 p.m. eastern time. they will be joined by special andt including ira jersey charles plosser. the next 20 up in minutes of "bloomberg market day," hillary clinton hit the late-night comedy circuit and she is actually pretty funny, but her message was not funny. she is telling stephen colbert that she does not believe in two big to fail. scarlet: the 10 remaining

republican presidents of hopefuls will meet for another debate tonight at face off against a new front runner -- dr. ben carson. alix: apple shares rising on a better than estimated third-quarter earnings. but will demand for the new iphone keep driving sales? ♪

alix: welcome back. i am alix steel. scarlet: i am scarlet fu. they look of the biggest business stories in the news right now. is buying digital assets from the parent company of the weather channel. they include the weather channel and weather underground websites and app, but not the tv channel itself. ibm has been trying to increase its aim at analytics -- data analytics and the deals details

were not disclosed. are learning details of the deal reached with the united auto workers union. the deal includes a bonus of $8,000. contract sharing them to offer from fiat car is located the vote on the contract begins of credit. is close topital hiring a former goldman sachs executive. he is john winkleried and he would serve as the co-ceo alongside jim coulter. this comes as tpg capital considers an idea. scarlet: you can always get more business news at bloomberg.com. let's head over to our markets desk where julie hyman has a check on individual company movers. tech names, of course. julie: akamai is one of them and the stock is tumbling in a big way. is taking forecast investors off guard and the shares are down by 18%. an analystling with

from bloomberg intelligence who pointed out that akamai said that some of its biggest customers cut down on traffic, talking about perhaps amazon, apple, and other big techniques. the issue could be that some of them have in-house systems and did not need to avail themselves as much of akamai's services. it is something that we are watching today. aig andatching after carl icahn called to break it up to different insurers -- life and mortgage insurers as well. he says that there is no more need and the time to act is now. the ceo of the company is replying and his statement, pretty much staying the course on strategy. the shares are up more than 3%. one of the criticisms that he has is that aig is priced to book value and it trails that of its peers good if you look at my bloomberg terminal, you can see that indeed he is right. we see aig trading at 80% of his

book value. a sin travelers, the market cap is smaller but muchrable in trading at higher price to book. interesting metric there to look at. we are also watching the hotel stocks today. starwood is rising about 5%. "the wall street journal" reported that three chinese companies would be interested in buying it. the highest -- hi it is in talks with buying the company. onx: much more coming ahead "bloomberg market that your code we will be back in just a few moments. "bloomberg market day." we will be back in just a few moments. ♪

scarlet: welcome back. i'm scarlet fu. i'm alix steel. republican candidates face-off tonight on the debate stage -- ben carson, who is on top of the bloomberg poll. scarlet: steve is in boulder, colorado with a preview. what is dr. ben carson campaign

saying about donald trump. ? steve: they know he has a target on his back and donald trump friendly does not like losing. yesterday that they are ready to take those attacks, but their game plan has not changed. they're going to talk about his message and keep it,. they're not going to throw any blows back. steve, thank you so much. joining us from boulder, colorado. alix: are we looking at a carson-trump ticket? scarlet: can you imagine? there is no way. we have much more coming up on bloomberg television. there is a one-hour special tonight on the preview of the debate. ♪

>> welcome back to the bloomberg market day and i'm alix steel. scarlet: i am scarlet fu. mark crumpton has news from the news desk.

mark: once one of the most powerful men in american politics but now the former speaker of the house of representatives is facing six months behind bars. he pleaded guilty today in federal court in chicago to bank fraud charges. this is part of a deal with federal charges of sexual's conduct. he admitted in court he knew trying to conceal his large cast -- cash withdrawals was wrong. spent to devote on the budget come republicans have revealed questions on whether the -- would be completely offset by cuts in other revenue. paul o'neill discussed the issue this morning. >> this is not about authorizing additional spending. this is authorizing the treasury to pay for bills already

incurred. the whole thing is a nightmare diversion from real fiscal responsibility. galling tos really watch the tragedy that has process offederal how we run our country. mark: also today, house republicans plan to nominate paul ryan as their new speaker. he says he will vote for the bill even though he thinks the process in his word stinks. it is not a great report card for school children in the united states. the two test results, math scores fell over the last two years and reading grades were not much better. only about one third of the nation's eight graders were proficient or better in math and reading. this is and is entering its final month and it has been 10 years since a major hurricane hit the u.s. since 2005, every category 3, 4,

or five hurricane in the electric have missed the united date. that is the longest streak dating back to 1851. we have breaking news at this they will join as co-chief executive officer. the breaking news is joining us now on the bloomberg terminal. you can find more on that. online. that is a look at the news right now. you give on the latest news at bloomberg.com. back to you. thanks. turning to companies, apple does it again, to forecasts on earnings and revenue largely in part to looming iphone demands. scarlet: it is expecting another record holiday season. shares are gaining up 2.8%. are joined from cambridge, massachusetts, with more. the thing about apple is it is so reliant on the -- on the iphone.

the growth rate is slowing so it cannot sustain the previous rate of growth. how much of that is factored and understood by invective -- investors? >> investors seem cautious with the company. if you look at financial fundamentals, which is not our focus but we understand them, they have been conservative come expecting apple too slow. is there is still plenty of opportunity for them to expand the market because so much of the world has yet to buy a smartphone and could always from android to a smartphone to from apple's's point of view, they think there is an opportunity to run and they have got other products they hope to sell. alix: that is switching from the android to the iphone, and they say 34% of the upgrade a saw last quarter. is the upgrade sustainable especially when i hear the chatter of will they cut iphone 6 reduction? it is really about the iphone's evan, which leaves them with nine months of eh.

>> that misstates things. it was a big deal when i came out with iphones. one of the staff that was really interesting in the announcement, only one third of the customers moved up from the smaller and older iphones before the fall of 2014 to the larger screen size. they have still got two thirds of the customer base to turn over plus any new customers they could capture on the new phones. we think these phones are attractive and interesting to customers. they were going to android to get the larger screen phones and they are now back to apple. it is part of the mobile mind shift. the behavioral change that follows was you get good with smartphones and start using it multiple to her day in multiple places. emily chang, our bloombert west anchor, as was listening into the cfo call on earnings and they did note some.

this is inevitable to some extent, but what can apple do to fix that, especially with ipad sales dropping off a bit? thehere they are feeling campbell's nation is on the ipad side. if you have a bigger iphone, you may be less interested in the iphone committee. really, i think what is happening with the ipad is there is a refocus on business scenarios. the whole tablet market is flat because a lot of customers are holding onto them much longer than we hold onto smartphones. and a half to two years on average. alix: explosive growth on china. when will you consider apple now being a chinese tech company? >> the two biggest mark the iphone has is north west mostly

and china. that is where a lot is in the year-old. i do not think we can think of it as a chinese tech company, but with such a big chunk of the customer base in china, they are clearly a company with a strong market in china, but they are a global economy with important markets in china and north america. the thing that has been interesting to see is the sales have not really been affected by .he economic explosion china, i would still expect to see some concern, may be less affected by the economic turbulence. they will feel it at some point. so much.thank you and iwatching from home was late, great question.

i was like, great question. coming up, we will take a look at the biotech sector, reporting earnings. and, his role as co-ceo, to turn around the struggling bank. he is now the ceo. anshu jain's left. ♪

scarlet: welcome back. it is time for the bloomberg business flash, a look at the

biggest stories in the news right now. britain is giving brewers another week to live out their merger. the makers say they need time to finalize their $106 billion deal. alix: a major deal in the snack .ood industry the price of $1.9 billion including debt. snyder's plans to make snyder pretzels along with other snacks. scarlet: the ceo of barclays on november 1. at one time, he was seen as a the current succeed ceo. antony jenkins was fired months ago. the rising legal costs also deal with tougher capital requirements. get more business

news at bloomberg.com. alix: let's look at how global markets are right now. it dropped the muslim month on low earnings reports. investors are still concerned what happens in the next few months. it does look like it came off the low and closed by .8%. flat, not thely volatility we have seen. david inglis joins us now from hong kong with more. david: communist are gathered in beijing to handle. that will turn out a fair -- fairly significant -- investors are focused. we have this survey from bloomberg. suggest it is actually done. the survey does also show one more cut to the reserve requirements. the pboc maytly,

leave these rates at the record low levels well into 2017. the benchmark is 4.35 percent. clearly, it is something to chew on and much to debate. alix: we want to check in with mark barton in london. investors prepared to dissect the policy statement since the fed kept rates unchanged a month ago. the stoxx 600, we are talking about oil companies being the worst performers are the best performers. here, home of the big macro news today. the swedish central bank is keeping rates at a record low of minus 335% but boosting its bond buying program. a look at how some of the biggest stocks in europe performed on this session.

the biggest decline in europe today. it is a supplier of aircraft, wheels, issuing a profit warning following a marked deterioration or the world's third biggest brewer. beat-quarter sales expectations. it will be the world's number two if the merger goes ahead. it was the biggest quarterly lost in about 15 years and yes it lifted margins at its namesake brand, but the provisions to cover from the emissions scandal rose markedly. it lost $20 billion in market value since admitting to cheating u.s. admissions tests since september. that is the latest from here. alix: we love you. great to see appear now for the u.s. markets, abigail doolittle

has the latest from the nasdaq in downtown manhattan -- manhattan. abigail: stocks are moving ahead of the fed here the composite -- but let'soth have a look at the other director down. walgreens, a 6.7 yesterday after walgreens announced it would buy a right aid for $19 billion in cash. shares are off sharply as the company trimmed its dts range of the top of the range brought it down. the midpoint is now 14% below concessions. the stock is off about 8%. the company posted a great third-quarter yesterday, after that stock is off as well. this stock is having its worst

day since 2000 nine after the company offers full-year revenue guidance that missed analyst estimates. there are a number of downgrades on the street. shares are off about 19%. thank you so much, abigail doolittle from the nasdaq we were just talking about the company posting the third-quarter profit that topped analyst estimates. raising its forecast for the year but the stock is down. scarlet: investors focus on its key drug. covering theng in biotech sector for bloomberg intelligence. with all the biotech earnings, what will be the common thread you are focused on? >> everyone is just looking at the drugs, but the company typically centers around one or two main products. that is what we are looking at yesterday and today as well. >> walk us through what happened. 6%, 12% onomfortable

a consensus. he kept with a consistent history. but what happened was, the big surprise was the key drug, a main drug right now. miss for the first time. they had the warehouse effect which tapers out. they expect it to be a bit down but they also expect europe to be better as well. it missed both. m jim is reporting after ?he closing bell today to -- w drug belongs

he lowers high cholesterol and will hopefully be one of its big money makers. looking for low to mid single digit growth. this will be quite a focus for us. scarlet: i wonder, is there any difference between the drugs those guys produce and a manufacturing versus the big pharma companies? how does it compare in terms of how widely the drugs are covered by insurance companies? investors value the stocks differently. >> that is true, but i think the whole story is because we -- there is more research intensive. in terms of where the drugs are used, it is a bit of a mixed bag. argue -- some very

revolutionary drugs. ,t usually depends on the job but in general, you could say that the commercial biotech company might make a better margin, perhaps. it seems like in general all drug companies got taken down with family and. hillary clinton's tweet about regulation in terms of drug pricing. had they been able to separate themselves from what is happening? >> a good thing is, hillary clinton tweet, you know, completely rocked the entire sector. the good news is as valiant got dragged through the mud, over the last few days, operating independently. operates in a different way from large companies. they are not as innovative.

we are starting to see some sort of a fracture between those two and how they operate. thank you so much. work if you go today after the close. coming up, there ain't no crying in banking. that was good. we will show you the challenges being faced as he tries to turn around one of europe's's biggest banks. ♪

scarlet: turning around germany's biggest bank is nothing short of a herculean task. revamp.lans to we will get more details on that tomorrow.

alix: instead of telling about the challenges, we will show you our own nicholas crunching the numbers. he joins us now to what is the biggest issue facing deutsche bank? walk through it? the valueit is really pair at the chart shows you the whole picture. deutsche bank is trading at almost half the price, whereas investors are 1.5 times. what that means is investors are valuing at less than what its assets are worth. you could put multiple interpretations in there but the main one is that a lot of investors think they really need to raise more capital and that would mean they have to sell more shares and be diluted. that is the fear investors have. the news eeo is saying he really sell to avoid this because

shares twice in two years, investors did not thank him for it. is the main chance, to try and avoid a capital increase in any means he can. scarlet: investors do not remain convinced. the return on at has lagged behind rivals such as bmp and credit suisse. about howyou talk john does not want to have to raise capital and yet everyone is convinced at some point, they might need to do that. what happens until then? do investors continue to keep it at a discount? we could see a turnaround tomorrow. i would like to caution that not everyone thinks they will rate cut. a lot think they can do without a rate capital. there is an overwhelming sense among many investors that this is a real concern. to avoid doing that, we have a note out from analyst a couple

of days ago saying they can scrap the dividends for this year here they could be cutting bonuses and selling assets and pulling all the levers they possibly can to avoid that should -- that share sale. the big problem is the low interest rate environment and also litigation. it is in many cases up to u.s. regulators what they will be and what they will always be in the coming years. much and notg too bringing enough money in. if you believe employees, how do you function when trading is kind of your lifeblood? nicholas: that is the core thing. oft will be the real proof the strategy, whether he can cut costs and whether he can reduce and cut stuff he does not need while retaining the top talent and the guys who bring in the revenues and work the magic

at the investment bank. by no means is it an easy task. deutsche bank is revamping of the same time as credits we spare there will be changes there. does that make the job easier or harder? good question. deutsche bank is a very different animal to both companies. says,pally, one barclays we will rely more on our unit, credit suisse basically follows upn and says, we will be a wealth manager, supported by a strong investment unit, it does not have that option. deutsche bank is essentially a big investment bank with transaction banking and asset wealth management pact on. still, the heart and soul of the company is investment banks. while notosts relinquishing -- relinquishing the position certainly in europe

is really at the heart of the challenge. scarlet: thank you so much for joining us. reporter forort, a bloomberg news in london. as this plays out, you have got managers and talented traders, the lifeblood of the firm. they're not getting paid their bonuses. they are taking off. alix: you needed to tear down the expenses and help revenues. coming up in the next hour, more on the thanks's upcoming decision. we will preview when wall street thinks policymakers should actually commit to lift up. flip a coin? uprlet: a special is coming at 2:00 p.m. at you do not want to miss. ♪

scarlet: welcome to the bloomberg market day. ♪

scarlet: good afternoon. i'm scarlet fu. i am alix steel. here is what we are watching it one hour to go before we hear from the fed. will they raise rates? latest productions are on the way. scarlet: another health care megamerger. ahead fore be hurdles the $17 billion deal? alix: carl icahn telling aig to break itself up and do it now. ♪ headet: we first want to over to the market desk where julie hyman has a snapshot of everything. a is surprising we have such one directional market on the fed day. it does not happen a lot. it is also unusual there is so vaste suspense, with the

majority of investors, economists, analysts, saying there will be no change today. that, investors are focusing on the fed and keeping rates lower for longer appear they also focus on earnings. all of that is leading stocks to rise on a session. if you look at my bloomberg terminal, you see we have a flip-flop from yesterday to today. energy was down here yesterday and today, it is rising by more than 2%. the leading group, can should beating the most to gains . if you look at the underlying oil prices, you will see why. an oil rebound after a dismal streak. seeing an uplift by about 6%, not quite 250 dollars per barrel. nonetheless seeing some relief and expressed in the energy market. inventory data out today and we saw increasing an increase in consumption. that is helping the oil prices today.

we are also seeing a rise in gold prices today. the fede coming back to on the perception we will see rates remain relatively low. also, despite the oil gained today, the general projection for commodities is lower. inflation lower. mining benefit from that gain in gold prices. alix: i'm personally very excited about it. but talking about earnings on any notable movers -- >> we have got to come back to apple, which has almost gotten lost in the shuffle. we have had dealnews and the fed coming up. apple is out with earnings as well and beating estimates, also projecting the holiday season will be strong. thoses helping to lift numbers. cbr e is a real estate services company, coming out with earnings per share for the full year. estimatesast is above and stock is the best performer in the s&p 500 today.

continuing with the trend of health care earnings that have been beating estimates, hospitals aside. the medical devices maker coming out with a forecast in the shares are gaining. we want to check in with bloomberg first word news this afternoon. mark crumpton has more with the news desk. congress isuse gop poised to nominate paul ryan as its candidate for speaker of the house within the hour. phil mattingly is on capitol hill and he joins us now with the latest. good afternoon. phil: good afternoon. it is the expectation that house republicans will vote overwhelmingly to nominate paul ryan and the former vice presidential candidate for the republican party to take over for john boehner. after the vote today, and he is expected to get as many as 230 of the members of the republican congress, the vote will move to the house for tomorrow where the full house will vote on paul

ryan. a key thing in the expectation is he will actually become the next bigger. he is now the next speaker was not nearly as many crises on his plate as he would have had a week ago. it budget deal struck between congressional leaders in the white house, it takes a number of major roadblocks off of paul ryan's plate, most notably the debt ceiling. what paul ryan will have to off the bat is to start negotiating the details of the final appropriations spending bill agreement. the deadline for that is november 11. the biggest issue likely to be on his plate as he is considering whether or not to take the job, likely to be off his plate as soon as the afternoon when the houseboats. paul ryan will get the votes today to be the republican nominee of the speaker? he will be named speaker tomorrow and starts work they cleaner slate been john boehner had recently. thank you. the israeli prime minister

benjamin netanyahu, criticizing and arab lawmaker for visiting a jerusalem holy site, the key issue in the recent wave of file and spear the prime minister told lawmakers to avoid the hilltop compound during these tense times. he said the man went there solely for the purpose of provocation, only to inflame the situation. minister saysance people fleeing war-torn afghanistan have no right to seek asylum in germany. he says the company -- the country and its allies are keeping troops in afghanistan longer than planned in order to protect civilians. the continued military course,nt means, of within afghanistan, people do not have to leave afghanistan. he continued, that is why the people must remain in afghanistan and when they come here, we must send them back to afghanistan. first wordook at the news right now. you can always find the latest news on bloomberg.com. back to you.

you.et: thank all eyes on the fed in less than an hour as policymakers decide whether they should raise interest rates for the first time since 2006. here is a sneak preview, they won't. alix: joining us now for a preview of what you can look out , carl, it is all about headline versus core cpi. the diversions we have seen. what makes them converge? >> right. the fed is focused on core inflation. however, they cannot completely dismiss what is happening in the headline. that is the price you and i pay in our daily lives and the fed does not want an ingrained to takenary mindset hold. the san francisco fed president williams said they are focused on the core but it is difficult to move when on the headline, it is pointing lower or at least inflation is much lower than desired. what narrows the gap is if oil prices destabilize.

it is unusual to talk about energy prices in terms of medium-term policy, but i think if we see oil prices right below $40 per barrel, that means we will have another leg down in gasoline prices and another leg down in headline inflation. that will cause the fed to have to startven longer initiating policy normalization. the three things i am watching .eally in the intermediate term one is gas and oil prices. two, the pace of job creation. it needs to be 150, 175, or better. on top of that, we need to see stabilization. that means manufacturing is running at least at 50 if not higher. if those conditions are not met, the fed will continue to delay. scarlet: what about the balance of risk? that is a part of the statement everyone is fixated on. that is important. >> absolutely. it is critical and i think a lot of people are missing this.

the balance of risk is still not symmetrical. there are greater downside risks and the fed has acknowledged as much in the meeting statement. the fed will not move to raise rates until they have signaled at least that ricks are imbalanced and we are not there yet. if we go back to the tightening cycles, they never move without sending an advanced signal at a prior meeting. we are not there. that is part of the issue. they do not know. they do not know until the day before that they will raise when it seems every fed member is looking for a different metric on jobs and inflation. >> that is right. the issue is, what is the rush? we have very low inflation and a slow-moving economy. we will see evidence of that tomorrow morning with gdp figures showing more than 1.5% rose in the economy. the inflation numbers, not overheating. the fed has the luxury of moving very deliberately. it will not be a few pieces of data that cause them to suddenly panic on rate policy.

they need to see a general improvement and they are not right now. that would give them the luxury they risks are balance and tilted to the upside before they start tightening. i am lookingow ahead but the eci number comes out on friday. do you know if there is any indication of where they might be? >> we will not have seen that number yet. however, they know if they look at the broader macro economy, there is very limited wage pressures. the u six is coming down, the official unemployment rate is coming down. -- ise fed is a missed amid a reassessment of the curve and they realize it will take a more aggressive decline in the unemployment rate to generate those pressures. they are just not sure what the new slope is just yet, but they will need to see at least hints of it. much, carl.you so

we will have live coverage of today's fed decision with mark crumpton, tom keene, and kathleen hays at 2:00 p.m. a lot to discuss and parse out. scarlet: and coming up, walgreens of -- agrees to buy right aid but hurdles may disrupt here. alix: and providing a boom for the tanker industry. we will hear from the ceo about what he calls the post opec world. and carl icahn taking aim at aig. find out why and how he wants the insurance companies to break it up. speaking out once again. ♪

scarlet: i am scarlet fu. alix: time now for the bloomberg business flash, a look at the biggest stories in the news right now. the former goldman sachs ascutive has been hired co-ceo. he will work with the cofounder and current ceo appeared he is president and co-ceo oh of goldman sachs. apple expecting another record holiday field by demands for the iphone. sales for the december quarter to 77.5 billion, topping the record. tim cook site upgrades to the latest iphone from android and growth in china for the outlook. getourse, you can always more business news, apple news, at bloomberg.com. let's head over to the market desk where julie hyman has some

information on defense contractors. >> a huge win for the u.s. government. bomber fromtrike the air force. it is a big win because, as one analyst told us, it is a david and goliath situation. shut out of crime contracts for since 1980.ans winning the contract would mean more for it and would be negative for the company's that it beat out. as much as $80 billion. the company's it beat out, boeing. both of these larger companies have one more of the preponderance of these government contracts. you can see both of them are trading lower. looking at general dynamics, the company is raising its full-year profit forecast, earnings beat analyst estimates and saw higher deliveries of jets and surging sales at its sub building unit here and i've got to save time and look at my bloomberg terminal to her the supply chain for the u.s. government, i did

not know it was possible to look at this. peter on my team pointed this out to me. you can see the reliance of the companies to the u.s. government. out with earnings that beat estimates today p 98% of the revenue comes from the u.s. government. you can see how dependent the companies are. >> check it out. it is a great chart. absolutely. julie hyman. at $7opose merger valued billion is enough to get its closest competitor a massive headache. it is already in fierce competition with walgreens. but will the deal have right -- regulators reaching? our deals reporter, ed, we know regulators like right -- airlines, any indication on where they stand? >> i think they will be tough on this one. you will see it will be walgreens and cvs. they will dominate nationwide, the market. walgreens,ll allow

which has already done a huge international deal quite recently, this will allow them to essentially leave frog to become the number one in the u.s. the really interesting thing is how the regulators actually look at the suppliers to the companies. for the customers, it has already been, i suppose, proposed previously. they have a lot of choice in all kinds of places. they have a lot of vendors. bigger issue is that the companies, essentially, this gives a huge buying power alix:. how do they wind up with that? how do they control where the supply chain is to how they are managed? >> with difficulty. walgreens has an agreement, they are buying drugs from.

cvs has a similar one, and there are other sort of smaller ones. i think what is happening here is, if you put these together, gives huge power to say, look, we want these drugs at these prices or we will go out and buy them wholesale from somewhere else. what will be interesting is whether or not they have the power to affect that. i think it is one of these things where they probably can block the deal, or certainly make it difficult and say look, if you want to do this, you have to broaden the supplies used, otherwise your pricing power is too great. megadeals over $10 billion are on the rise right now p one you have got transactions larger than $10 billion increasing in volume, what does that say about where we are? in the middle, at the end? think it is confidence. it is hard to say whether we are at the middle or the end. we are definitely not in the beginning.

there is increased speculation we may be coming toward the final side of it just because we in seeing so much liquidity the market and so much demand and that cannot go on at that pace. it has to go down logic the at some point. is there are hear more $50 billion deals coming down the pike and quite soon from what we hear. all right, ed. tankers multiyear highs. increase.ng has a 70% we will hear from that ceo next. ♪

alix: oil climbed the most in eight weeks today after u.s. stocks stockpiles declined to one company that likes to see a high oil supply is invesco operator. but head over to corey massar and car -- cory johnson for more. it wenk you so much welcome everybody on bloomberg tv. this is of course bloomberg radio. carol massar in new york and cory johnson. talking about the tanker business because these folks are moving a lot of stuff around. someone who may know something about that is the chief executive officer who joins us in our studio this wednesday. you guys have a good snapshot of what is going on around the globe. around throughout the world to tell us what you're seeing and what it tells you about the global economy at this point. >> our business is moving jet fuel, diesel, and gasoline on a worldwide basis. business has been really good for us for the last year.

good's record earnings per we announced yesterday strong earnings of $.52 per share. in 9% yield. this is up from $.30 per share in the third quarter. we think the trend should continue. we think that is good and it could get better this winter as the market strengthens. the book in our business is currently about 13%. we think by the end of the year could be down 10 to 11%. that is the lowest it has been since 2001. in our business, not only is demand very good and outlook are positive, but we will be in a silk -- supply constrained environment. it is bad news for charters and greatness for us. you know, the big driver in our business has in the construction and the development of refineries in the middle east. more more oil is moving refined products and less crude oil.

that has been driving demand growth in our business at five or 6% per year. on top of that family have all love, ourlity they customers. when they do well, we do well. it is a very positive outlook. >> it seems to me the one of the theons we see that in middle east is because of the high shipping costs of unrefined product. wife that happening in the middle east and might that slow down when the rates come down? >> no, these are large -- long-term products -- projects. the ones now have been in the plans for a decade. it is part of a long, strategic planning process of middle indian country's to build up the refinery capacity. shipdo not just want to out raw materials anymore. they want to refined products and that is what they are doing. >> these are not inexpensive

items at all. add to thenning to fleet? tell me what you're doing in the area. partowth is in important of our strategy. we had ships in the water and in a few weeks, we will have more. , because we felt the timing was right. the market has improved a lot and that is coming through in our earnings now. cory: the favorite day of most boat owners is the day they buy or sell the boat. last 25hips typically years, longer than your typical powerboat. ours has an average of four years. fishing is fun.

aside, we have a very .odern fleet at 15 years of age, we might sell them on. but having a modern fleet is a big advantage here they are more attractive to customers and more fuel efficient and more widely assessed -- assessable. carroll: what is the biggest market and what is the most potential for you guys? >> we think of the medium-sized ship in terms of oil products, they trade everywhere. the big market for us right now is exports, which have grown 12% year on year. we think that will continue. also, exports out of the middle east is really the big driver. carol: thank you so much, tony, the chief executive officer of our more shipping joining us right here on bloomberg radio appeared black you guys.

scarlet: thank you so much. still ahead, carl icahn has found his latest target, aig. why the billionaire pushed to spit of the company put deep implications for the ceo? ♪

alix: from bloomberg world

headquarters in new york, welcome back to the market day. i'm alix steel. and i'm scarlet fu. we are joined by mark crumpton. house republicans are expected to make it official at this hour, nominating congressman paul ryan to be the next speaker. he has said he will back the budget bill they will vote for later today, although grudgingly. isote on ryan's nomination set for tomorrow. he was once the most powerful man in politics, but now house speaker dennis hastert is facing six months in prison. he pleaded guilty today to better role -- to federal bank .raud charges he admitted in court that he knew what he was doing by withdrawing so much money was wrong. he will be sentenced at the end of february. in south carolina, a white share

of 70 is caught on camera tossing and dragging an african-american student across a classroom has been fired. the sheriff's office said the maneuvers used by the officer acceptable," but also noted that the student was being disruptive. the officer has previously been the focus of excessive force allegations. the sheriff's office and fbi are investigating. are raids on boko haram nigeria's northeast. officials say 30 members of the islamic extremist group were killed. rescued several thedren, but none were schoolgirls captured in april of last year. you can always find the latest news on bloomberg.com.

i will see you at the top of the hour for the fest -- the special said coverage. back over to you. alix: carl icahn is taking aim at aig. the insurance investor wants the giant to break into three companies. "despite therote definitive action on the part of regulators to make this company's mullah, you have known sign ofave shown no urgency or strategy void of leadership." betty: this has nothing to do with hancock, but what happened with aig after the financial crisis. the insurance company is a much smaller version of itself and what carl icahn is saying, certainly someone who does not mince words, is that the pieces do not fit well together anymore

and they should be separate. they are more valuable as separate entities, so he is talking about spinning off the mortgage-backed unit from property and capital. it is a more cyclical business, a lot more volatile. and also, the life insurance, which is that core, stable unit come a all three of those -- stable unit, that all three of those should be separated. and peter hancock was essentially the chosen successor to bob benmosche. many in the insurance industry and former aig executives have questions that pick. they wonder whether peter hancock has the insurance know-how. he's been here's i jpmorgan, but in the derivative risks management. spent years at j.p. morgan, but in the derivatives risk management. alix: is there any sense as to

why now, why the urgency of carl icahn? betty: many look at the stock and say it is not going anywhere. that is essentially what carl icahn is noting. there have been calls before, particularly right after the bailout, for the company to be broken up. aig said heirman of thinks the company should be split up and was very opposed to been low -- two then ben moshe a,very opposed to ben moshe saying that it should stay together. it is interesting that this should come back to light. one thing about aig is that it is such a big company still and you saw the letter from carl icahn. the question now is, is it too big to succeed? take youi want to

inside the bloomberg terminal to show you aig's market cap. it has recovered since the doom days of 2009. but if aig market value, you go back to say, the early 1990's, a far cry from $81 billion. 2000'sh is in the early of $28 billion. carl icahn is looking for to go back, maybe not to that level, but something north of where it is. i asked hank greenberg, the former aig chairman and ceo, and he said, in the writer context it really has not recovered. here is what he said. hank: there is a reverse split and if you adjust for the reverse split, it has not moved very much. it speaks for itself. betty: and you can imagine,

look, take his words in the context that he feels the company has never been the same without him there and he was forced out by eliot spitzer. to him, the company has lost a lot of its most valuable asset. scarlet: thank you so much, betty liu. alix: we do have breaking news concerning texas instruments. for more, let's get to julie hyman. texas instruments is in talks to acquire maxim. --log devices might be previously was reported that analog devices might be in talks with maxim. maximal received interest from abi. it mayng to our source, not be willing to sell unless it gets a very high offer.

in stock has had a surge shares of maxim. .ou might imagine if you look at the maxim shares and how they are trading, we had a leg up of about 6.5%. do we have the maxim shares? let's take a look at those. we have a positive volatility trading, which is not uncommon. but yout live trading, can see the reaction following this news. and you can see the analog devices shares, now dropping by more than 1%. it has been such an incredibly busy time for these chip deals. it is a must as though they are putting pressure on each other with the deals getting done for others to now team up. alix: thank you so much, julie hyman. joining us now is the reporter who broke that story, alex sherman of bloomberg news. what are you hearing?

alex: no price point yet. my colleague and i broke the story last week. it basically said there was another bitter, and that is, texas instruments, who may have been in on the process all along. a bank that maxim has and they are talking with several people. the big decision from the maximum data point is whether they will sell at all. we see the stock jump quite a bit today, but it is possible from our sources that they will decide their internal plan is actually better than selling. we have seen significant premiums, 30%, 40% premiums from other chip deals recently. and maxim is already a big company, $11 billion market cap company. ti pay up? it would be a big deal for

either one of those companies, a bigger deal for abi than ti. there have been many deals in the industry already. with this be a tie up or -- would this be a tie up or a defensive move? alex: good question. talking about pmc sierra or others, those could be seen as defensive. maxim probably doesn't need to do something. they are already a bigger company and do not need to scale as much as smaller players. in a sense, they would have to get an offer they could not refuse in order to come to a deal. but if you look at abi or ti, they are looking at their peers such as intel and a votto and xp exp and we have seen this enormous spring in

semiconductor acquisitions. and they are thinking, is now the right time and is maximum]? scarlet: alex sherman, -- is maxim the right target? scarlet: alex sherman, thank you very much. alix: it got hot as the former treasury secretary had a fierce with steve ratner on the implications of a rate hike. we will bring you that exchange. scarlet: and if you minutes away -- just a few minutes away from the october step meeting. ♪

scarlet: welcome back to the bloomberg market day. i'm scarlet fu. alix: and i'm alix steel. it's time to take a look at some of the biggest stories on bloomberg news right now. moments ago we just learned that texas instrument is in talks to acquire maxim integrated products. there was also interest from analog devices and they may not be willing to sell unless they get a high premium. the talks are continuing and may not result in a transaction at this time. citigroup ceo michael corbett said income inequality is among the most important challenges facing the u.s. and he is doing his part to help young people find jobs. he made his address to the economic club of washington earlier today. michael: we cannot be

indifferent to the larger challenges facing our country and there are few issues more pressing than the widening wealth gap. it is simply unhealthy for society to fracture this way, so we are doing our part to help young people find jobs and be able to participate in the economic growth our country is experiencing. scarlet: corbett also said the u.s. economy is in what he called a cautious recovery. alix: alternative asset manager cbg capital has hired john winkle read as co-ceo. he will work alongside the current ceo jim coulter. scarlet: a lot of titles there. you can always get more business news at bloomberg.com. we are 16 minutes away from the federal reserve and often on interest rates and while many markets are laser focused on the timing and degree of liftoff, people don't think it is going to happen today. but there is a lot of debate

over the effect that somewhat higher interest rates would have on the economy. alix: and did qe actually work? one fierce debate took place this morning. paul o'neill and steve ratner joined david wesner -- david westin and that new role. qe one, wee did should have stopped doing qe's, but we didn't stop. we quit $4 trillion on the fed balance sheet -- we put $4 trillion on the fed balance sheet. we have basically destroy the flexibility of monetary policy by running this policy of zero interest rates for all of this time. it has had a transformative effect on our economy, because it has made savings and impossibility. to go forced people further up the risk chain in debt and equities and things

because you cannot get a decent return. a you look at a return on money market account, it is three places behind the decimal pouint. >> secretary o'neill issued the critical world -- word, which is growth. a returntry to get monetary policy does not seem to be working well from where i sit. we cannot get out of any of these jams unless we grow the economy. >> there are things you would do to get growth we are not doing, like using fiscal policy or regulatory policy on the supply side. but congress is gridlocked and doing nothing. i would respectfully disagree with paul on this. i think what the fed is doing, it is the only game in town and you have to play that game. when you say we are not getting growth, what you don't know is what it would be if the fed were not doing all of this stuff. and i think most economists would say it would be lower. i think the fed has done a great

job under difficult circumstances and should not have been left to do it by themselves. but i think they have done what they had had to do. ,> congress can't do its job right? and therefore we will destroy the possibility of a monetary authority effectively doing their job. they are out of tools. this grandalk about copper mine that has come through. what is your view of it? compromise that has come through. what is your view of it? me, the stamm to on the people. and what i mean by that is we actually defaulted on our debt in march. most people don't know that. >> i don't think i knew that. >> we defaulted on our debt because we ran out of debt ceiling. what we have done since march, jack lew, and secretary of the treasury -- the secretary of the treasury, has played channel from to keep us going

march through november. effectively, the secretary of the treasury has got something like $300 billion worth of flexibility to default on the debt. stephanie: hold on, jack lew is consciously playing this game, or is he doing what is necessary to keep the country afloat? beenince 1985, people have playing this game of effectively accommodating a congress that cannot do its job. for all of those years since 1985, every time we approach a debt ceiling, they go through this charade where the secretary effectively accommodates additional time. and at the end of the day, they don't really have a choice because this is not about authorizing additional spending. this is authorizing the treasury to pay for bills that have already been incurred. the whole thing is a nightmare diversion from real fiscal

responsibility. to me, it is really galling to watch the tragedy that has ofome our federal process how we run our country. scarlet: clearly, some strong words from paul o'neill and plenty of push back from steve ratner, defending the fed. all of these years of zero interest rate policy has not really helped many. you can see overall personal savings as a percentage of income has really dropped off. for every dollar that we are in, we are only saving about a nickel, and i'm rounding up. that is compared to $.11 in 2012. if you want to go further out, it's a far cry from $.14 in 1975. alix: what is interesting, though, is that not everyone agrees with what the data actually shows. a red deutsche bank, one analyst

said that -- over at deutsche wek, one analyst said that are reaching new lows. scarlet: you not getting money into your bank account. alix: right, you have to make up for the fact that rates are at zero. and when they raise rates, people fit more because they knew keeping the money in the bank would give a good return. withhighlights one chart multiple disagreement, so how can the fed make a decision when there are so many ways of looking at it? scarlet: and i think that same division is taking place within the fed, which is complicating their next step. if they cannot agree on what a how canerest rate was, they normalize interest rates? alix: and you heard about growth, how do we get to growth? you look at policies like in

sweden and denmark and that is not helping. the interest rates are not being passed on to consumers. all of these tools, whatever you use, it is not working. scarlet: do you think the fed is having this exact conversation right now? alix: they're having lunch. -- and here's julie hyman. julie: complicating it further is they want the stimulus, the markets. that is the conclusion you have to draw when we see rates rise. averages withr all signs pointing to no changes in rates, all three major averages are trading higher. the s&p 500, we've been tracking it throughout the day. is there any change going into the decision? not really, a little bit of a

leg up, perhaps, going into the statement in just a few moments. pe on myok at wr terminal. a 4% chance of a raise today. 35 at theup to december meeting and rises to almost 60% by the march meeting. look at the other asset classes to see what they are reflecting today, the bond market for example, we are seeing an increase in the yield going into the statement. zero -- 2.07% is where it is at the moment. alix: interesting to see what the forecast for december will be. we have more coverage. bloomberg market day will have it all for you. the fed decision is eight and it's a way, mark crumpton -- is eight and is the way, mark

crumpton and kathleen haynes. any special guests? alix: they will be joined by the philadelphia fed president, charles plosser. and they will also be joined by ira jersey. scarlet: that is at 2:00 p.m. we will be back. ♪

mark: in just a few minutes, the federal reserve will release its latest forecast. i'm mark crumpton and this is our special coverage "the fed decides." ♪ mark: welcome, we are less than five minutes away from that decision. we will get an instant reaction from ira jersey and former president of the philadelphia federal reserve, charles plosser. many economists

believe it will stand pat on interest rates. i want to bring in kathleen hays. , they are calm ahead of the fed statement. do they have reason to be? the odds are it will not change. it hasn't since 2006. the futures traders are not betting on a rate hike until march. hasou look at what transpired that last meeting, which we were also excited, right? we knew they were going to raise rates. tom was talking about it on surveillance and ira was talking about on the floor. a drawdown pretty dramatically in september and that is one of the things that put the markets on notice that a key pillar of the fed getting

ready to move is in question. tom: what has shifted from the previous meeting is the job dynamics. necklace wrote a -- changes wrote a one word could really make the difference. i talk about this more than -- you and i talk about this more than steelers football. policyn: in the last statement, one of the big things that the fed did was to add a couple of phrases that digested the fed was watching the selloff of the chinese market, watching the bubble bursting, watching the u.s. markets and the slowdown in china, putting more downward pressure on the inflation. we heard the fed saying that. fed said it was monitoring developments abroad.

change thatkely to statement, but that was also -- madee the change many change their bet that it would be next year. weeksn the last number of , with a typical did a check you andan interest rate market german markets showing ever lower. mark: let's get a quick check on how markets are reacting in anticipation of the feds decision. it might have to do with the fed and it might also have to do with the other things going on involving earnings and the economic data we've gotten fairly involving m&a, of which there has been quite a bit of activity recently. as long as the fed remains on course and doesn't do a dramatic reversal, as drawn talking

about, the stock market will stick to the direction we did on. -- as you all were just talking about, the stock market will stick to the direction we are on. it looks like a bit of a leg up going into the decision. about 8/10 ofsing 1%. bloombergk at my terminal, we have been looking at the interest rate probability, the w.a.r. p. wirp.ses -- the this tries to use the futures to indicate what the fed is doing. this goes to 4.6%. tom: eight record, mohamed el-erian -- a quick word, mohamed el-erian is watching us. he is looking at some of the ramifications kathleen is talking about as well. mark: we will get to ira jersey and charles flossie -- charles

plosser a bit later. will policymakers decide to move or will they stand pat? mckee, go to michael steny by washington with that statement. by in washington with that statement. the zerowe will have interest rates for at least another month and a half. no change in the benchmark rate. this is justified, said officials say, that economic conditions in their view have not changed that much. if anything, conditions have slightly improved. they drop their view from september that recent global financial and economic development may restrain economic growth and put downward pressure on inflation. they say the economy is expanding at a moderate pace, which is the same characterization that they use in september. household spending and business