from bloomberg's headquarters, i am david gora. the countdown clock indicates we are two hours away from the fed's decision on interest rates. investment sandel 6-8 the interest rate comes months too late. and look out uber and lyft. apple plans to challenge them and plans to use driverless cars to do so. i want to head to the markets desk with ramy inocencio. ramy: i want to talk about crude oil right now. it is at a session low right now. nymex crude is falling off a cliff. right here. right at 10:30 a.m.. that is when they came up with

the latest inventory report. by --rd that -- grew points. brent crude also fell down 3%. terminal, thismy shows the shrinking discount rent which here and is a global benchmark over the last year. is the see now that it smallest at the last 11 months. this was at $.60 a barrel. this comes after the u.s. congressional orders. opec has said that the policy change really won't have an impact. it is a net importer. so this had a big impact on stocks. ramy: absolutely. you can see that we started out pretty well.

only to pretty much lose steam alter the morning and now we are only just off the session highs. energy and oil stocks are the biggest wait all day. i want to take you on this other charge here. it compares interest rates here. equity valuations. 0%,ates have held at valuations have been climbing. they peaked right after in 2008. we may expect to see this spread --row if the fed does rate does raise the interest rates. david: i want to get a check on the first word news, pimm fox is at the news desk. coming earlyas is to washington, d.c., congressional leaders agree on a bill that will avert a government shutdown. make taxlation will cuts permanent and remove a 40-year-old ban on oil exports.

wind and sun -- one and expansion. schools in los angeles are open today. more than 1500 school district relations were closed yesterday after they received an e-mail threat. however, the fbi has determined the threat was not credible. in baltimore, the jury will continue to deliberate in the case of a police officer charts with the death of freddie gray. the judge told the jurors to keep deliberating. from injuriesied sustained while in police custody. in colorado, a powerful storm on ad two feet of snow mountain before barreling onto the plains. nearly 500 flights were canceled at denver airport. hebdo is giving 4.4 million dollars to the victims of the terror attacks in january. they say they will turn over the

donations from 84 countries and that the french government will appoint an oversight committee to determine how the money will be destroyed it. that is a look at the first word news, you can get more on these and other rigging new stories 24 hours a day at bloomberg.com. i have pimm fox. david: we are less than two decisiony from the fed over whether to raise rates in the first time in almost a decade. here to talk us -- here to talk to us is jens nordvig. columnist,market mike regan. let me start with you. situate this for us in the cycle. why is this happening right now? mike: it is a lot later in the cycle that is typical. how long this cycle will last, who knows? but certainly the profit portion of the corporate earnings has

peaked and plateaued off. a lot of people believe that based on past experiences that the evaluation expansion of the local market tends to stop when the fed starts to raise interest rates. so individual stocks tend to level off and hit a ceiling. withat really leads us profit growth to lift the market from here. looking into next year, the consensus is 7% earnings growth. a lot of people wonder whether that is too high. we ended up with flat earnings this year. the other main question i have, has the market gotten ahead of the fed? we have been waiting for this all year. if not longer. and the market has flattened out. so maybe that affect was pushed forward because everyone has been waiting for this interest rate increase.

and possibly the same story maybe with the dollar. the dollar seems to have peaked again some of the big euro and yen. is all thew is that dollar strength will get from this, or if there is more to come. david: i will give you an easy question. at 2:00, the question -- decision comes out, what happens with the dollar? the situation we are facing in terms of what's price is that the market is only expecting around to hikes next year. there is a lot of talk right now about a dovish hike. it is not easy to do because the market is already expecting something that is dovish. willing tonk they're commit to something that dovish, so options are going to be open could price a

little bit more of a rate increase next year. in the scheme of things, the dollar has been rallying for almost two years. isn't that there is anything new about that trend. david: so one of the things we get today is a new plot. jens: over the last several quarters, we have analyzed these and there has been a tendency for the market to move in the direction of the dots. but it is different today because now they are lifting off. it used to be an academic prediction about the future but now it is something they are recommending. so we had to take the levels much more seriously. if i look at where they will end up, it is a huge gap. is very difficult for them to hike and pushed rate expectations down. so much to and on pacing here today. we are looking for four

rate increases. -- a few weeks ago with the stimulus plan, i wondering whether this gives them more breathing room now and allow the euro to weaken a little bit. 3% move up in the euro. what do you think about this? what impact does that have on mario draghi? to allow him to ease up? debate aboutig whether the ecb is done after what happened in early december. i think that is still very weak. it necessitates another round of stimulus. so it is not something that is around the corner but it matters

whether you are done. from that perspective, i don't think we have seen the turnaround in the euro yet that people talked about after we had the surprise announcement. today it is about the fed. so be careful. i wanted to ask you about emerging markets. do you see that as a preemptive move? i think the chinese currency dynamics have been very much about getting the status abouthe -- and now it is trading in a more normal currency. the economy is weak. they continue to have monitored qualitative easing and the currency is being allowed to respond more to that than it has in the past.

there will be more depreciation in-store. david: emerging markets have already been hit by talk of a lift off. is there more to go? from a short-term trading perspective, we think about it today. we have some clarity about what the fed will do. and about what will be supported. just because they don't trade well when there is uncertainty. but one of the outlooks next year will be about whether there can be more recovery. have come down, down, down. i want to ask you about your predictions for volume tomorrow. assume it would be pretty high. it has been trading a little bit below. i think it is expected to explode. david: thank you very much. that was jens nordvig and mike

regan. special coverage begins at 1:00 wall street time. plungecontinuing its right now. we just talked about equities and currencies. how could defend hike affect the rate of crude? apple will talk about how -- autonomous business. coverage, we will have over how the expected rate hike could affect the global economy. ♪

david: welcome back to

"bloomberg markets," it is time for a business flash. google plans to make itself driving car unit a stand-alone business next year. according to a person briefed. a car unit will fall under the alphabet umbrella. they will use cars for geithner -- cars were higher as a direct challenge to uber. krispy kreme is doing more to promote the coffee. location, workers are grinding beans. i have been troubled with slowing sales growth and more demanding customers. has slashedtical the forecast for the year. valeant is starting to answer questions about how it distributes its product. boardearson said that the is welcome to "fire me if they want." you can get more business news on bloomberg.com.

?amy inocencio ramy: canadian pacific is making another run to buy norfolk southern. it could at up to $3.4 billion. -- isk southern is up down but canadian pacific is up marginally. is meant to -- any drop in canadian pacific share prices. investors aren't really looking forward to what is happening over there. homebuilders are rising after data came out showing strong housing starts in november, up 10.5% since october and 16% year on year. -- rising right now. toll rising the most, up by 2.3%.

to natural gas, futures are trading near the lowest level since 1989. it will close today at a 16 year low. $1.82. sinceill be lowest price 1995. it is happening as an unseasonably warm december curtails demand for heating. this is on course to expand as production heads for a fifth straight annual record. david: oil is extending losses today amid new data on inventory. i want to bring in alix steel. she is a fan of commodities. let's start with what we have seen, a drop. alix: the inventory numbers came out. you had actual crude but you also had product inventories

ailed despite the fact that refiners worked less last week. imports are at the highest level since 2013. basically we are sucking up all of the extra crude in the world. it is coming here and then being stored here. that is really weighing on the overall price. david: i want to ask how this could affect the prices, but let me talk about exports. news broke that paul ryan had come to a deal to budget taxes and part of that was lifting the long-standing crude export ban from 1975. what effect could i have? alix: nothing. at all. it is uneconomical. you have to pay for oil to come from cushing to the u.s. and then to asia or europe or venezuela or mexico or wherever. --order for that to happen this is not the right chart. hold off on that.

but in order for that to be economical, energy aspects say be fourbe -- has to dollars away from brent. that let's not forget saudi arabia is really aggressive in taking back market share, particularly in asia. they will cut prices and do whatever it takes to make sure who they are the ones deliver the bulk of their oil to asia. david: what is the significance of the narrowing spread russian mark -- narrowing spread? well, overall you are dealing with oversupply in brent and wti. there is too much supply in both, you will see that narrow. flows come toe the u.s. gulf coast and that has helped elevate no uti. is actually brent that is

suffering the most with the potential export ban. that is lowered export prices. brent has come down. if we can't expert oil -- can't going tol, you are have to keep them in a relatively tight range because they will be equally demanded in the oil market. david: we get the decision in litter -- in little over an hour. will this have an effect on oil prices? alix: a proprietary model looks at the dollar versus the interest rate moves, versus what we see in equities. to see what actually moves the oil price. that actually is moving oil prices by almost 40%. the dollar is about 5%. and liquidity's is about 5%. so fundamental account for 50%

or less for the move that you see in the oil market. which makes the volatility are and what happens to the dollar extremely important. we haven't seen these factors since the lehman brothers. david: i think what we have seen in the oil industry has a lot of , who worked leveraged, have a lot of money. it would have an effect on them. leverett,ou over everyone thought oil prices were going to rebound and now there is an admission that we will see lower prices for longer. more shops are coming out saying, we could hit production cost going down in order to shape up. and that makes it difficult for these guys to finance and refinance. impact foro another

companies, if not necessarily the oil. david: dallas alix steel. still ahead, apple goes driverless. we will tell you about their plan, coming up next. ♪

david: welcome back to "bloomberg markets," i am david gura. apple wants to make its driverless cars a stand-alone business. b has to, how long has apple been in the game? -- how long has google been in the game? in 2009.tarted testing , one ofe two things

them is to take the self driving research and make it a freestanding business unit inside their new corporate umbrella, alphabet. the second point is to make , right offering fleets for higher like uber. they are saying that you can call google and a car will come get me, but it won't be a driver. david: where is this going to happen? are these cars ready for primetime? like chicago? >> right for higher will make a lot more sense in a big urban area then texas where you drive an hour to go to the grocery store. but they are doing most of the research on these robot cars in the bay area and also in austin, texas. that'll will be a logical place.

they already have the infrastructure to launch these ride for hire services. and there is another interim step, what about instead of just launching them to a whole city, but at least in a more controlled environment? like a college campus? so then you have a little more control as you start to put larger numbers of people in the vehicles. onid: what is the timetable getting these cars out there and doing this? i look at the valuations and they wonder. how much of this kind of driving is baked into that? will it happen soon? john: well, it is happening in stages. cadillac in april showed a car with limited autonomous driving, like on a freeway between one freeway ramp to another. those kinds of things are happening. , i cans of a full-blown

read my book while i go to pittsburgh -- that is a ways away. so it will happen in stages. selfe talking about driving becoming a freestanding is this unit in google, in alphabet -- that will happen next year. they are moving quickly. david: this is a race. thank you so much. just ahead, we are of the fed rate decision. we will head to washington for a preview. ♪ the only way to get better is to challenge yourself,

and that's what we're doing at xfinity. we are challenging ourselves to improve every aspect of your experience. and this includes our commitment to being on time. every time. that's why if we're ever late for an appointment, we'll credit your account $20. it's our promise to you.

we're doing everything we can to give you the best experience possible. because we should fit into your life. not the other way around. tand that's what we're doings to chat xfinity.rself, we are challenging ourselves to improve every aspect of your experience. and this includes our commitment to being on time. every time. that's why if we're ever late for an appointment, we'll credit your account $20. it's our promise to you. we're doing everything we can to give you the best experience possible. because we should fit into your life. not the other way around. welcome back to " bloomberg markets." let's start with the headlines this

afternoon. pimm fox has more from the news desk. m: let's begin with the obama administration increasing aviation security, adding a third level of terrorism warnings. j johnson issued a threat bulletin as a new intermediate threat for the national terrorism advisory system. the new alert will be place for six months and summarized the threat, outline the response and recommend ways that the public can assist. thatian authorities say two men arrested over the weekend may be linked to the terrorist attacks and are accused of taking part in a terrorist organization. they entered in october using forged passports and were portably waiting for orders to carry out attacks. republican leaders will delay until january house vote to repeal the health care law and block money for planned parenthood. the measure has cleared the

senate and house passage seems assured. they say they are planning for a house vote just before the state of the union address. a vote to override a presidential veto would come later in the month. atop russian diplomat says turkey should pay compensation for the russian warplane shot down on the syrian border. it was on a bombing mission near the turkish syrian border with the two-man crew when it was shot down in november. turkey said the jet violated its airspace but moscow has denied that claim. executions in the united states this year fell to the lowest level since 1991. they said 28 inmates have been put to death so far this year, well below the peak of 98 set in 1999. capital punishment is allowed in 31 states. only six conducted executions this year. these andt more on

other breaking stories 24 hours per day at the new bloomberg.com. from the first word of desk, i'm pimm fox. david: thanks for a much. many of you have circled the fed meeting in red. our senior economics correspondent is in washington. if you look at the futures on this, looks like people are betting the decision has already been made. what could we learned today that is different? all, theyirst of understand that the fed is indicating clearly that they could do a rate hike today. this is like easing the clutch in. indulge me that metaphor. at sign going to be a surprise. i do however think we need to statement.lly at the whether the fed intends to follow a measured path, meaning regular hikes up over the course of the next year or whether it will be gradual, meaning that they will make a decision month

by month or quarter by quarter. there is the possibility of did -- dissent. jeffrey lacher wanted a rate hike. there might be dissent on the downside. there might be dovish dissents. ,ael brainerd or daniel tarullo that will give us a sense of where the committee is together. looking forreally is clues about the coming year, but no one is expecting any surprises today. david: as you go through this turgid prose, trying to make , presumably you will get a chance to ask your question. what are you most interested in? brendan: david? turgid? this is fascinating stuff. i'm surrounded by people with their hair on fire who can't wait to read it. particularly in the press conference i want to understand inflation better. more importantly how it is the fed thinks that they're going to get to 2% inflation.

markets don't believe it. when they look at their own numbers, the median estimate of all committee members is 1.2% over the course of the next year . when you look at what the markets think, they think it's half of 1%. there's a wide divergence over the course of the next five years. how is it that they are going to get this inflation? they got unemployment down, they can't get inflation up. i'm looking to see if they're thinking has changed. this has been the case for the last several meetings and statements. will they change their approach? avid: looking forward to greatly, brendan. stay with bloomberg for coverage of the decision beginning at 1:00 eastern time. akin august the barclays chief economist called for -- he has .ince changed his tune he joins me now. let's start with that change of course that you made. what led you to do it?

>> originally we moved to march when we had a spike in volatility following the unexpected depreciation of the china currency, leaving -- leading to volatility in markets. in the past when this happens, they don't thought -- they don't higher but they don't fire. it was easy to say not september. at that point deciding when to move was more difficult. when we look to the european episode, that took two quarters to play out. we moved into march, but we felt we would have to be nimble. obviously what would happen has payroll growth slowed, march was looking good. october happened and we got a swift bounce back in hiring that suggested that labor markets relaxed and normalized. volatility came down. when that early october and november time came and the report was released, it was clear that this episode of volatility david: had

dissipated. thank you for not saying -- volatility had dissipated. david: thank you for not saying data dependent. what is your thinking on the shakeout in 2016? michael: we would be surprised if the chart showed less than 100 basis points next year. i think it will be hard for the committee to think about policy normalization and then put something down left with roughly one supporter. we're thinking three hikes next year, 75 basis points. we have a softer outlook than the committee and your first half, as the previous segment discussed, inflation is soft. we think the fed might skip the june hike, for example. we are less than where the fed is and above where market expectations are. david: how quickly will the fed be able to say -- e.g., this rate hike is working. how nimble can they be?

michael: the standard rule of thumb will say -- you know, it will take 12 to 18 months for a rate hike to fully manifest itself in the broader economy. to me that says that they will move in december, likely going to move in march. not much will change by then. as you roll into april, may, and june, for six months you should be able to get some assessment on weakness, is it persisting or is the economy growing faster than you thought? i think 3, 4, 5 months to let this play out. david: how real is the fear that it might not have the intended effect? michael: the fear in terms of the market reacting negatively and putting in a taper tantrum, that's very real and very tangible. for them you think about most of the corporate borrowing, auto loans, home loans, those set off

the long end of the curve. the real trick today is to get off zero while avoiding a taper tantrum. that's three you get the dovish hike discussion in markets. we definitely want to avoid the specifically moving higher, that would tighten conditions more than they want. the last question here is just about the mechanics and guidance we will get. what would satisfy you in terms of guidance? michael: for me it would sound something like -- we lifted off today because of progress and the view that the outlook remains in place. still remaining accommodative, that's the second point. third, decisions will be made on a meeting to meeting basis and don't think that we are marching off to 200 or 300 basis points. finally, we will egg a balanced approach. both sides of the mandate are

moving in opposite directions right now, meaning we have to go gradually. those are the points i will be looking for. those were all in the speech two weeks ago and i expect to hear the same today. it.d: michael, appreciate stay tuned for live coverage today, special analysis begins at 1:00 eastern here on bloomberg television and on bloomberg.com. as we had to break, i want to take a look at some pictures from omaha, nebraska. hillary clinton speaking at a rally cohosted by warren buffett . he said that it was a blessing to be born in the u.s.. hillary clinton speaking there with warren buffett. clinton: we have had five presidents, three republicans and two democrats. i happen to know both of the democrats. [laughter] ♪

david: you are watching bloomberg. this is your global business report. here's what we're wait -- what we are watching. sanctions against iran are elected to be lifted . fresh data out of china shows growth in the world's second-largest economy's slowing down next year. checking in on the luxury market after product reports -- product reports disappointing earnings. iran wants to boost oil supply after weeks of sanctions being lifted early in 2016. the global head of commodities research spleens the implications. >> it will impact -- impact the price of all crude, but the market share position of other exports are in danger. ironically the battle will not

be east of suez, it will be in europe. david: economic growth in china is expected to slow down next year according to the top government-backed research group . growth has slowed in 2016 and china is moving its economy to one based more on services and less on infrastructure and exports. honda is offering a positive outlook for accurate in the coming years according to the vice president, who spoke to bloomberg in tokyo. >> accordingly, we have great potential. that in itself has a very strong competition. for the accurate as our flagship. chance thate a good will be a successful brand next year. bank, dreyfus

suns, admits that it helped hide assets from the u.s.. they will pay a $24 million fine . they reached a similar agreement to pay more, $99 billion. had weak demand in hong kong and macau, blaming for the slump. they said they would increase sales to make up for slumping sales. following the similar strategy to competitors. that is your business report. stocks rising for third straight day before the fed decision, let's go to abigail doolittle live. abigail: we thought it would be interesting to take a look at some stocks that had done exceptionally well over the last nearly seven years. excluding facebook, which went public in 2013, amazon, netflix,

and google have outperformed the composite index nicely. irrespective of the fed, though, it would be interesting to take a look at two of the top bank in 2015 to see which one comes out on top going forward. amazon has a low short interest, strong growth, $15 in cash per share and analysts like it. paul vogel at barclays, very vocal on it, rated the stock as overweight. target suggests the stock could go higher by 30% in current levels. david: abigail, thank you very much. billionaire investor sam sells says the fed is behind the curve. he sat down with our colleagues to talk about what's next for janet yellen and whether he thinks there is change around

the corner. sam: this is a rate hike that is too late. the economy is closer to falling over than it is to going up. stephanie: hold on a second, if we are closer to falling over, what does that mean? how bad is it? that there ishink a high probability that we are looking at a recession in the next 12 months. i think the strong dollar is having an enormous impact on u.s. production and businesses. and they are being competitively disadvantaged by an extraordinarily strong dollar. to some extent it's a function of being better than other places, not necessarily good, but better than other places. those places are not competing with us with devalued currency. that's making it very difficult for the u.s. to compete internationally.

>> taken into your view on the economy, when you say that there would may well be a recession in the next 12 months? stephanie: within the next 12 months -- sam: within the next 12 months. world trade is slowing. currency continues to be manipulated. you are looking at the beginnings of layoffs at multinational companies. we are still looking all around the world for demand. tell me where the demand is. ultimately that's what's going to rectify and move us towards growth. it's very hard to find anyplace in the world, maybe other than south sub-saharan africa, where there is better growth but no scale. so, when you look at those factors it is hard to see where strength is going to come from. i think that weakness is going to be pervasive. see anye: it's hard to

of those outcomes been different if they had raise rates six months ago. sam: except that if she had raised rates six months ago we would have begun adjusting to that. i think that she would then have more room if a recession is on the way. stephanie: help us understand. if you see a recession on the horizon, what is janet yellen looking at? is she not doing a good job? sam: i don't have an opinion on how janet yellen is doing. i think the fed as a whole is very conservative and very cautious. stephanie: too conservative? to cautious? sam: do i think i should have her that she should have raised interest rates? i already answered the question. stephanie: fair point. sam: i think the fed is very

concerned and i think to some point they should be concerned. they got to be looking at the same numbers i am. those numbers are not robust, from what i see. the improvement in employment is improvementbut the in employment is at the low end of the scale. ,avid: that was sam zell earlier today on "bloomberg ." how did these fund managers not see the junk bond rout coming? next. ♪

welcome back to "bloomberg markets." the jump rout hasunk bond spared few, but some big-name funds have been particularly hard hit. one example is northeastern investments, the fund has dropped 5% this month, dropping

9% before the junk bond market started to recover this week. joining us now from los angeles, bloomberg news reporter john gilson. they were in high heels a few months back. then we saw the rebound yesterday. who fared the worst year? john: the high-yield funds that invested heavily in oil and gas and other commodities, where prices have an falling, the risk up.heir debt has been going that positions to take, especially if you are overweight. david: spell that out a little bit more for us, the correlation with energy. yeah, i mean if you are investing in companies selling fuel and the price of fuel went over one yeartle ago, today trading it under 40, you know, it's harder for those guys to pay the bills on the bonds. the risk of the bonds is going

up, they are getting downgraded and it is harder to train them for a profit. yeah, these guys are stuck in some tough positions. hard for them to make money. david: stay with us. i want to get some more insight from the senior portfolio manager of asset management -- asset managers. >> i think that today is fake a company. this is the most -- fate a acompli.-- fate a this is so well advertised, it should not surprise anybody. rebounde saw a yesterday. for investors looking at high-yield, this is a buying opportunity? karl: this is a tremendous buying opportunity. we have the value approach at western where we take the fundamentals and compare it to the market, which is pricing in almost a disaster scenario where

the high-yield market is over 9%. the higher yields are weaker, but very small. corporate fundamentals remain ,trong, debt coverage is good we think of this is a big overshoot. wonder, as you talk to portfolio managers, how many seem to be caught unawares? john: a lot of people were surprised by what happened to the price of oil. he said no one would have expected saudi arabia to increase production by one million barrels. you know, that really threw the price down. that said, a lot of the people i also talked to said that what happened in the last few days is more of a technical wine, people selling because they had to, not because the underlying fundamentals were not performing or because risk of repayment or default had changed. david: do you agree with that, carl? for sure.

the high-yield and emerging markets have traded off and i the fact thatrtly the fed will raise rates today. if you think about it, that was the middle of 2006. neither twitter or the iphone existed back then. i think it makes into the cake. as fundamentals, as long they remain strong, which we believe, should really reward investors to invest today. thed: if you think about pacing of his rate rise, how are you looking forward to 2016? carl: the market has priced into, the market has priced -- r, so we arefoui kind of in the middle. they will have a hard time giving what we call a dovish hike, sending that signals to the market in that the u.s. economy might not be able to withstand it and she does not want to send that message. secondly i don't think they want

to paint themselves into a corner. they want to have flexibility and be data dependent. do managers say anything about how they might shift their strategy going forward? some managers talk about the opportunity to buy some closed in funds. also the ones that have performed the best in strongest are the ones that invested in like financial industry and real estate industry debt. yeah, ok. david: john covers bonds for us in los angeles. ,arl, thank you for your time both of you. our special on the fed decision starting in a few moments. ♪

betty: in one hour, the federal reserve will release its latest statement and forecast. we are live worldwide. this is our special coverage of the fed decides. ♪

scarlett: from bloomberg world headquarters, joining me here in keene,dio, tom bloomberg's economic editor, michael mckee and we have with us as well the chief u.s. .conomist let's get a quick check on where the markets are. let's start with the equities because we have sunk to session lows and if you look at the dow, it is actually unchanged. barring says tom, let the s&p 500 still holding on to the third gain of the week. let's move over to treasuries because there is some selling across the -- tom: yield curve in the last hour or two, has been -- that is

two-year,rt of the but elevated yields, we've seen in the last -- highest in five years, if you look at the 10 year, that is what we are looking at right now. it is actually made a series of lower lows and since june when you look at the yield. 30 year at 3.01%. we have the selloff in the credit market, but it seems to have abated for now. carl, what is the setup in terms of market volatility as we head into this decision. carl: the goal will be for this to be a bit of a snooze fest in terms of market development. the fed has been clear in singling his attentions to raise rates, it does not want any major surprises in the way can stem some type of out by tightening of financial conditions is through guidance, signaling fewer rate hikes. , is this your work

about the decision, is it about the press conference or boat -- or both? michael: it's about getting it over with. would be there to because they would see the same things they see and the markets are where the fed is. this is not going to be a big move, it is not going to have a major impact on the economy, but the psychological aspect of getting it into the markets and getting the markets priced has been the major hurdle, so far. scarlett: the fed and the market did not see eye to eye on this. the ratey see i die on hike coming today, there is -- some discussion over the subject of rate, but the fed has changed its ways and it's thinking on the future trajectory and have continually rower -- lowered the slope and they will do more of that. tom: with got some terrific

charge and -- charts", do we have a dot plot? scarlett: it will be the one from september. tom: that's fine. carl: it tells you the fed is raising rates by 100 basis point -- basis points in 2016 and 125 basis points in 2017. they will not deliver on that trajectory. michael: the dot plot is going to be the most interesting thing out today because of the market dissertation, the dot plot does not work. the fed does not needed to be telling you it's raising rates because it's supposed to be telling you what they think the appropriate monetary policy will be under the conditions each one of them sees in the economy, not a forecast. the markets taken as a forecast and that is what they are stuck with. scarlett: let us hold on to that thought because we will check in with the first word news. the budgetgin with

battle that is expected to end tomorrow with a series of congressional votes. republican leaders said they have a agreement on tax and spending bill, the $1.1 trillion measure, 2200 pages long, will fund all government agencies through this goal year 2016. the obama administration is as adding a third level of terrorism warnings. the homeland security secretary issued a threat bulletin, a new intermediary step to the national terrorism advisory system. >> we are at a new phase in the global terrorist threat which adds implications on the homeland, particularly with the of use terrorist groups of the internet to inspire and recruit. we are concerned about the self radicalized actors who could strike with little or no notice. >> the new alert will be in place for six months and summarizes the threat, outlined the government -- government response and was ways public in

helping counterterrorism efforts. los angeles officials are defending their closure of hundreds of schools in the district yesterday. new york city received the same threat and decided -- decided it was a hoax. the government health insurance the deadline is being extended. saysbama administration anyone needing help care has until tomorrow at midnight to sign up. saysead of healthcare.gov more time was needed because of unprecedented demand. you can get more on these stories and other breaking news 24 hours a day at the new bloomberg.com. scarlett: thank you so much. if you are just joining us, i'm scarlet and we are -- tom keene is with me, michael mckee and also carl riccadonna. isning us now by phone pimco's global strategic advisor.

2006,to joining pimm: in he was assistant treasury secretary and he served as chairman of the economics department at columbia university. >> this is the week we have all been waiting for for years. besides star wars, we get the fed. is it going to live up to the hype or is it, as carl suggested, the fed going to get away with making this a bit of a snooze fest? out the answers in an hour, but i think there could be some surprises. there was a lot of talk about a but throught, language and the statement, he tried to convey a dovish message and a lot of that hike is going a be priced in so we have situation today work yellen and the fed announces a very dovish height, but not as much as expected, it will be interested -- it will be interesting to see the market reaction. i'm glad -- i'm glad

you bring up dovish height, that oxymoron. what exactly does a dovish height mean? >> the idea is if you're hiking rates, that would create higher bond yields and perhaps selloff emerging markets so the fed is trying to attenuate net -- that by saying the left all caps will be very gradual. it is called the new neutral which rationalized it -- rationalizes a gradual liftoff. the idea is to minimize collateral damage. tom: i want to get out of the behavioral economics here. let's go to the bloomberg terminal and look at janet yellen's just fear, there is the fed, up we go, down we go, crisis and the massive zero bound. here is what they are afraid of, the bank of japan, the bank of japan at zero bound tried to raise rates. they got crushed, they go along

at the zero bound, they come up again and they got crushed. these are asymmetric risks. tell me about the a symmetry if the fed acts today? >> as usual, excellent point, this move is not without risk. no central bank since the crisis has been able to get off the lower bound. there is a risk, i think yellen and fisher believe that it is a risk that they want to take. they want to get up zero and they see an unemployment rate at 5% and i think that is a risk they are willing to take, but you are right. tom: they said the 200 basis points for the next slow down in the edit states, we are nowhere near meeting that mandate of getting off the zero bound. carl: i think that is a long way off. the fed is not raising rates now

so that they have room to cut later on, if the fed wants to have insurance against future rate cuts, it will keep policy lower for longer, they have told us that any number of times. scarlett: i want to bring up while carl and richard were talking, the 10 year how is it record highs right now. we have seen the two-year approach 1%, if you look at the 10 year, over a one-month, it is more volatile. do that for aan whole year and trace janet yellen's adventures with the bond market and i want to ask you, dovish high, maybe not as dovish -- how could she possibly come out and not be dovish enough? she has to know what she is going to say is going to have a major impact. >> sure, but look at draghi several weeks ago. it was thought to be a slamdunk that he would expand the program. be, whathe issue will

does the statement say which is a committee judgment, then what does yellen say in her press conference and how far is she willing to speak for herself? these are all variables in play and will make for fascinating viewing. tom: we join you this afternoon from 1:00 to 1:59, maybe she will take the press conference longer than that. where to make -- remember we are on bloomberg radio. they called me and said tom you idiot, we can see the chart. every terminal chart we have today will go out on that wonderful radio app. scarlett: you can bother tom on twitter and he will send it out to you. the fed funds target rate, going back to the 70's, it averaged 5.5%. going back to the 90's, averaged 3.15%. do we know what the destination is in this cycle? >> we don't know, but it will be a lower destination that prior cycles. pimm: says we are in a new

neutral -- pimco says we are in a new neutral. things eventually in 2019 or 2020, they were like defense that the funds rate to be at 3.75%. the destination is lower than we saw an prior cycles. great moves,e got a dot plot and janet yellen present coverage along with the statement, although those things, what are you most interested in? carl: we all knew fairly well what the first rate increase and that's why it is so probably priced into the market, we don't know what the hurdle looks like for the follow-up move, the second rate increase, and that is going to be the big communication challenge. what is the dream glide path? carl: her dream glide path is that we end the day going -- for the markets do not react and

then we see a glacially slow fed going forward, that means two rate increases next year and re-in 2017. tom: glacial is not an economic textbook, there is a real economy -- does it get in the way of a glacial desire? some way, i think the fed would like that, or percent growth next year and the global comity booming, -- global economy booming, i think they would like that. is challenge to the fed chair yellen likes to say every meeting was live, but that creates a problem because they had no intent of hiking every meeting, early in 2016, we will get into this guessing game. she will have to get some better control on the communication other than to say every meeting is live. why would you say that, it will put us out of work. [laughter] anticipation.

fed, moreon the expert analysis from former fed officials. the former vice chair of the federal reserve board, plus the former richmond since president. stay with us. ♪

tom: good morning everyone. janet yellen in a press

conference -- michael mckee and relative with me as we look at a most interesting and historic moment this afternoon. i was in dubai and spoke with a firmer -- former treasury secretary. it was fascinating to see the nuances of discussion. he would suggest it is a serious mistake if the fed raises rates today. >> i believe a decision to delay rates runs risks that are easily reversed by subsequently raising rates, where is a decision to raise rates, if it proves to have been the wrong decision, is a much more difficult decision to correct. tom: there is larry summers with a big focus on new savings within the economy. then you move on to the december 6 washington post article where people are still talking about secular stagnation, the idea of a slower economy. the title gets your attention, preparing for the next

recession. let's bring that up. i agree that the fed will likely not be able to raise hundred beeps without undermining the recovery chances, the chances are high the recession will come before there is room to cut rates by enough to offset it. is thewledge that this case must surely produce confidence and inhibit demand. richard, how does confidence fold into the decision that the chair and vice chair, the governors and the president have to make? richard: the way it's going to play out is that confidence or lack of complete knowledge is the reason why they will have a very gradual liftoff have. larry summers would say they should not hike it all, but i think where stan and janet are, there is a case to hike, but they want to go very slowly and going slowly, they may not ever get to that ultimate destination, a big one reason we

-- we have a gradual liftoff is because of uncertain knowledge about the outlook. and alegant michael mckee big of the quote this morning, the reluctant hikers. of them aree anxious and some are very reluctant. scarlett: if you will get what's going on in the markets right now, we looked at the 10 year yield in session highs, oil prices have fallen to their session lows, resuming their selloff after a bit of a dead cat bounce. if you look in gold prices, they are on the move as well. what i found interesting was of ourllary clarke, one producers, was back testing what happened at the last rate hike and she noticed that oil prices move the most -- moved the most. oil is playing a huge role because it is driving inflation and will drive what carl said he wants to see, when the next rate decision is, but

you also have the impact of today, the senate voting to end the oil export ban. that is having a big impact on the oil market as well. tom: i want the why of this meeting. with come all this time from 2007, why now, why not in september or for that matter, why not at the next meeting? richard: chair yellen got herself in the fed into a position where she likes to say they are data dependent, that is not really a monetary policy and to sort of fill in the blanks, she says they are data dependent but wilhite by december -- but will hike i december -- by december. bigecember versus marc a deal, probably not, but given the way she sort of tee up people thinking, shears of indicated that she believes the conditions have been met to hike.

it would be an enormous surprise and could probably save -- severely backfire if they don't hike because the markets would say if they had no confidence the hike now, thanks must be really bad. i think it is inevitable we will get a hike in 40 minutes. scarlett: december, march, maybe the same thing, but other central banks are waiting to act. on thathave some charts showing massive trans-atlantic convergence between bank of england and what we see with the ecb. richard clarida will continue with us and it's important -- in this important discussion, 40 minutes from the fed decision. michael: we were talking about the 10 year note yield at its high for the day. of the curve,nd for we can build, before the other direction, yields are down , or basis points at the terminal. they come down to 19 basis points from 23 earlier.

-- participants started to price in a fed move, but all of a sudden they have started to go the other way. this is the fed decides on bloomberg television and radio. we are 40 -- 40 minutes away from the fed decision. seven years ago today was the day the fed went to zero. we will see if they back off. ♪

michael: welcome back to the bloomberg television and radio, this is our special three-hour coverage of the great decision. time now for a quick take on the fed. seven years ago today, the federal reserve cut its benchmark interest rate to zero. we focus on how going the other way will be a lot more complicated. it was relatively easy to cut the overnight bank lending rate,

that is what banks pay each other tomorrow, another to maintain a legally required amount of his or -- reserves. the funds rate is the cost of money for banks, the changes it makes little to the economy, affecting all kinds of things, employment, opera -- output, the price of goods and services. after years of quantitative servicing, the banks have more than they could ever need, there is now more than $2.6 trillion part at the fed as reserves, nobody is borrowing. to push rates higher, the central bank plans to raise the interest rates, reducing any incentive for banks to make loans elsewhere to lower rate. at the same time, the fed will borrow cash from banks and other non-bank in two shins like money market funds at a fixed rate in exchange for securities. they areverse repos as called to put a floor under rates.

fed officials expect the fed funds rate will trade in a range between the other two, at least that is the hope. been at zero before, so that nobody knows for sure that the plan will work. some members have voiced uneasiness about the liftoff, including the president of the chicago fed who says he is nervous about how this will work. so far, investors do seem to be buying the strategy, short-term money market rates have gone up, moving into the fed likely target range of 25 to 50 basis points. what everybody -- what everybody in the market wants to know is how much for the rates have to rise. stressedet yellen has that further increases after liftoff collected become very slowly, getting investors to buy into that is her other major challenge. scarlett: thank you so much and for more information you can type quick on your terminal. this is the fed decides on

bloomberg television and radio. still with me, tom keene and michael mckee who has been showing us the different metrics that the federal reserve needs to take into consideration. what i find interesting is how inflation means different things in different people's minds. tom: what might has been emphasizing as critically important is not about the big picture blather which is important, continuing to speak with richard clarida but also about the minutia, the inside baseball, the toolbox that they had -- that the fed has. we will visit with the former vice chairman, we question the first lady of american economics, we will speak to her next. ♪

this is bloomberg television and radio and you're

watching three-hour coverage of the fed decision. i am scarlet fu. andkeene is joining me michael mckee. theave breaking news -- governor of paris go says the island will default in january desert governor puerto rico says the island will default in january or may. congress has given some help to puerto rico but falling short of the lifeline that rico was seeking. tom: on this historic day, it is wonderful to spend a few minutes with alice rivlin. you know her from fiscal economics but as of her vice-chairman of the fed, alice rivlin understands the import of this date. you are on the record as saying when they raise rates does not really matter. yellen,that for janet can she look at one america or is in a quality so large now that janet yellen is forced to look at two americas in our analysis?

-- in her analysis? >> inequality is a growing problem in america. i don't think much of what janet is thinking about at the moment as she looks at the rate increase -- i want to congratulate you guys. you have managed to arouse an awful lot of suspense about a move that i think is pretty much a foregone conclusion and better telegraphed that almost any move the fed has made. tom: i'm going to start crying . this is fantastic at you have done this. we try to make it as suspenseful as we can. what will you listen for in the press conference of today does not matter? not say today does not matter. i think they will raise today and i think it's the right thing to do. it would not have mattered a lot if they had done it at the last meeting or they do it at the next meeting.

to gok it's important ahead and raise and they have telegraphed pretty clearly that they are going to do it today. i think their motivation is mainly to get back into a more normal range. there are some disadvantages of and the the lower end biggest one is you cannot go down, you can only go up so they want to get back to a range eventually where they can move in both directions. they are not worried about high inflation. they are still worried about low-inflation so that's not the motivation. they have given us so many reasons for doing or not doing over the last year. now we are on the subject of when the second increase is, what will be the trigger? >> the state of the economy. clearly, the economy has been strengthening recently in the labor market looks a lot better

but it does not look great. they will be watching what happens to the various unemployment rates and they will be watching what happens to inflation as well. most of the time, they are watching to see how the economy is progressing. right now, it's kind of uncertain how fast it will strengthen. the move comes today, it indicates they think the economy is strong enough to start getting back to normal but they sure don't would -- don't want to do it very fast. michael: is this a little like potter stewart? i can't at the five for you? how are the markets going to be able to get to where the fed is the next time? i think the fed is very

transparent these days. get talks a lot and janet does it in her speeches and other governors especially the vice chair stan fisher talk a lot about how they see the economy. they will continue to do that and they will focus very heavily i think on what's happening in labor markets and what's happening to inflation. that is not a different thing. it's what the fomc always does. they never know exactly what's next few months and the economy and they certainly don't know now. scarlet: former fed vice chair, alice rivlin, joining us from the brookings institution. the distinction is how improved our fiscal situation is pretty to about the lack of fiscal drag down and austerity and that helps. michael: the drag is going away

which may offset some of the stronger dollar impact. scarlet: if you are just joining this is our special, the fed decides come as we count down to the federal reserve decision at 2:00 p.m. and the press conference at 2:30 p.m. let's look at where the euro is trading. at euro is slightly higher 10953 .53 we are looking at little changed for the yen and put much range bound the last couple of days. tom: richard clarity is with us from pimco. ofhas become a bad habit hours. wonderful to have you as well with us, ira.

what are you learning in the yield market right now? it signifies that the market does not believe we are going to get fast inflation or fast growth over the next couple of years but that the fed will hike and they will hike right now three times by the end of next year. big deale has been a about the three-month t-bill getting normal. that just a bit on the fed meeting or a bet on future fed meetings? on future fed meetings as well so off you look at the piedmont's six-month t-bills are trading, they are toward where you would expect a hike in march. that's where we are now. michael: what markets are not priced correctly? >> one of the big ones in the biggest risk i am worried about from this meeting in the next few is the mortgage market. agency mortgages are not priced for the federal reserve to stop

reinvesting its $1.6 trillion of mortgages. these andns a lot of every time they get a principal payment, they keep reinvesting so they are buying almost all the new issuances in that market. if they stop that cold turkey, the market could replace quickly. michael: the 30 year generic agency bond is based week trading at its average of the last year or so. >> that's correct and that's a big worry. what i will be listening for in the press conference as well as any statement about operations the new york fed might have after the fed statement i. scarlet: what do we know about how the fed will drain the excess liquidity from the system? can they do it without disruption? ofthis is a new system necessity since the old system will not work with excess reserves. what they will do is they are going to have 2 rates and a

quarter. a rate of interest in the reverse repo facilities and then a rate of interest on excess reserves. i think the plan is to have a substantial reverse repo program initially, the idea that as that reduces the excess reserves, it will the federal funds rate into that corridor. what is unknown by us and the fed is how big a program would need to be in order to have the intended effect. as you mentioned correctly, we are doing this at year end and markets sometimes get sloppy in december. to minimize the operational challenges the new york fed may have short-term. i have spoken to fed officials and they are confident they have the tackles they need but obviously, this is a real. this is no longer on the drawing board did tom: who is making these decisions? >> you mean the operational decisions? t,erullo or lacker

are not making these decisions. >> the federal open market committee makes the broad decision implementation of that directive is done by the trading desk at the new york fed but under tight parameters. scarlet: does that mean bill dudley? tom: yes, bill and his team. >> the main part of their job description is to implement the policy as decided by the committee. i think your point is important that we might not get exactly into the range the fed wants. there could be a lot of volatility. the markets get tight at year-end but the short-term markets right now are clamoring for paper and they are clamoring for investment. even yesterday, overnight repo -- the amount it costs you to fund the purchase of a treasury on margin spike yesterday. that's important because the fed has not hiked yet.

yet they are kind of worried about how much liquidity there will be. tom: this is critical. stuffinutia operational is like watching pete dry but it's the heart of the debate. every single phd academic economist is riveted on this right now. that is that's the part unpredictable and we don't know if it's priced in. tom: can we show that chart that michael mckee as? .carlet: we will ge we want to get to one of those charts that michael mckee has been working on. michael: we will talk about why people are so interested in the. ot plot.an d here is a chart of what the fed says should be the proper course

of monetary policy, at least the consensus of the 17 members who put in their dots in september. the goal line is where the fed things proper monetary policy will be and the other two lines above are where they were in may and june. they have come down but not as market.he if you look at where the fed is, in 2017, they are at 3.5%. the market is at about 2% and as long as there is that the virgins, you will have real problems executing monetary policy but keeping the markets moving correctly. looks like a denver broncos downfield chart when peyton manning is desperate. my chart is something important and it speaks about the macro economics of the moment. of two clarida is one or three people who are expert on this. at the bottom is the german two-year yield in negative territory and got ugly.

the green circle up top is the land of janet yellen. in thee divergence yield, it's a two-year maturity between germany and the u.s. that cannot sustain, can it? it can be sustained for a long time. will beine as it sustained for a long time and what will happen is it will be supportive of the dollar so we will have repercussions in other markets but yeah, i think it will be sustained for a very long time. ramificationsthe to the real economy and the european banking system working with negative rates? >> let's talk about the u.s. economy first. it supports the dollar and we had a big move in the dollar versus the euro and we have retraced a little but i expect the dollar to resume strengthening against the euro. at the margins, that slows our exports and reduces inflation.

that is a head wind. that is one reason i believe there will be a limit to how hawkish the janet yellen fed can get it if they get very hawkish, the dollar will strengthen a lot and that will slow the economy did there is a regulating mechanism of that which will maintain there for a while. tom: that divergence is there and we will put that chart out on bloomberg radio plus. that was brilliant how he took that the divergence and brought it back to what we see. it's a dovish hike? like -- i'm confused . scarlet: this is bloomberg television and radio and we will bring you more expert analysis and investors. charles prosser, the former philadelphia fed president and

bill gross will speak with usright after janet yellen's remarks at 2:30 p.m. don't go away, this is bloomberg television and radio, the fed decides. ♪

scarlet: this is the fed decides, a special live on bloomberg television and radio and bloomberg.com. joining us now from richard, virginia, alfred prosser who served as the richmond fed president.

what an interesting thing that happened in 2004. you left is the fed began its last tightening cycle. this does not happen very often. at that point, the economy was coming out of recession. it was starting to have speed. do you see similarities now to what you were seeing in 2004 when the fed last began aghtening or is this completely different economy changed by the great recession? >> i think more of the latter. there is a lot of difference. the economy is not as strong but the key difference i think is the outlook for inflation. as i was preparing to leave the fed, remember we were concerned about another acting up of inflation and we were not that far away from high inflation. this is an entirely different ballgame. what will happen to inflation is really a question. to go back to the divergence you were talking about earlier between the fed expected path of

the funds rate and the market current expectations, the real difference is the fed expectations based on the expectation that inflation will soon pick up. the market is skeptical about that in that's why there is a diversions. you see inflation picking up and can the fed create inflation through its extreme very policies? >> they have been trying hard enough without a lot of success for the last several years. i think there are -- we are not seeing it yet. on howppens will depend the inflation performance actually turns out to there are straws in the wind that maybe inflation will rise. labor markets are much tighter now than before. also, some of the things have been holding the inflation rate down like energy prices. that may fade. the other thing is holding back

things is health care costs so expect to see health care costs rise soon but we have not seen it yet. known to walk on water like the confederacy leaving richmond on that dark night across the river. jeff lacher had a wonderful speech in november. quotes a very thoughtful from him from the great dissenter. what interests me is i think larry summers would agree with the jeff lacher on that statement. are we asking too much of janet yellen in her group? actually have sympathy with that interview. the effective monetary policy

and real variables over time is pretty limited. you mentioned larry summers and his point of view and there is evidence that what economists call it natural rate of interest is relatively low now as a result of a number of things. you cannot read that rate in the wall street journal. that's a the case, force largely because of things like excess savings over investment opportunities. if that's the case, that will put sort of a damper on rate increases going forward. that's a factor that is likely to keep these future increases conceivably even more gradual than is now anticipated. tom: i think that was an agreeing, al broadus with larry summers. >> i don't agree with all his it's a view just that one point the michael: you mentioned

dissenters. if it's interesting to see if anyone defense today. the number of descendents, the l --e is fed bank presidents the yellow line is fed bank presence on that has gone down the elastic dissent was 2005. janet yellen says she expects dissent. is it good for the fed for people to disagree? >> today, when you have such a change inly important the longer run context, it might be more of a problem in terms of providing clarity to the markets on the public than would normally be the case. dissentiew is that some from time to time and routinely decisions are good.

it's not just one mindset in the committee. they are thinking as a group about a lot of complicated issue so it's only natural that some people will disagree. i don't expect a dissent at this meeting. jeff, my worthy successor at the richmond fed who has dissented a lot will dissent at this meeting given -- assuming there is a rate increase. there has been some speculation that a couple of the governors may dissent who oppose a rate increase but my guess and instinct is that they will hold back. broadus, we will watch and see if there are any dissents. i wrapped jersey is staying with us and we are getting closer to that decision. - ira jersey is staying with us. scarlet: i thought of how charles plosser will be on with us later on and he is written

something in the wall street dissenttalking about versus unanimity in the fed decision and how it creates concern -- confusion. have been on the old days were everyone did their arguing inside. now everyone talks outside . themhere is a day to check the dow is doing nicely, watch that off of the fed meeting. the euro is 109.56 and gold is 1070 pounds and we will be back with the fed decides. ♪

the fed decides

come as on bloomberg television and bloomberg radio and bloomberg.com. we are less than five minute's away from the fed decision we will take you there live. i am here with tom keene and michael mckee. tom: very good, many good people to talk to. i want you to take is back to the third week of august, 2007. i remember the emotion as the fed went to the discount window. review for us the courage that the fed had in 2007. bad,en things really got you might recall that i was on bloomberg television with kathleen hays on july 20 3, 2007, when the commercial market -- commercial paper market broke it the fed said you can borrow from us if you need the money and it was still a few months before the general public in evernote realized we were in deep trouble. richard clarida, bring us

to where we are today. what was the most courageous moment for our central bank as we extracted ourselves from that moment that we just spoke about? >> i think there were several whole range ofhe policies put in place under the ben bernanke effect from august you would have to say the fed making the decision to step in and support the mortgage market -- we call it quantitative easing but it was using the fed's balance sheet to support the mortgage market so that was a huge decision as well. the ben bernanke he and janet yellen fed credit for improving and refining forward guidance is a total policy when they had no traditional tools. scarlet: we are about 2.5 minutes away from the decision. if you look at the different asset classes, there is a lot of positioning before the actual

announcement even though people have made up their minds already. what has happened is the croupier has told you to put down your bets. in theirhas to put money to position. it has nothing to do with the decision in the first couple of minutes. >> i think that's totally right. if you have not positioned your folio in a way you think will benefit one way or the other from the fed hike, you have been under a rock for the last couple of months. this point, everyone will be focused on the statement and what kind of forward guidance and what janet yellen says at 2:30 p.m. i'm going to watch the u.s. two-year yield to see if get a higher yield as the first-order. we may not get that but that's it scarlet: i am

keeping my eye and equities which have come back a little bit off their lows of the session. of 1%re still up by 5/10 and there is a question whether this equity rally consisting itself without the help of the fed. it has gained since 2009. michael: i will watch the dollar because it is the most sensitive to what is going on. it will be hard to press out which currency pair matters. your favorite measure is the vix and that will probably move the most as people try to figure out the volatility in the post fed market. tom: i love the work you have done on the short short-term market. inside of three months, 90 date her, the commercial paper being important. this is fun. scarlet: this is your super bowl . need to pay you

to get you up early in the morning? let's not go there right yet. mike, what are you going to be watching for? michael: the decisions and the mechanics of how they do it. scarlet: in the meantime we want to head to washington, d.c., where brendan is standing by. stocks higher before the announcement. is a hike, exactly the hike that we expected. one quarter of one percentage point. this is the federal reserve open, the committee that is more unanimous. consensus with that plot, they are agreeing more. seeing in thee fed. from atlanta to the top, it's moved down in the long-term understanding and long-term of -- of the -- federal fund rate. 1.4, that's what the fed