the day one after the fed. mark: european stocks are rising for a third day. they give a nod of approval to janet yellen's rhetoric. the european close starts right now. ♪ betty: we are going to take you from new york to london in the next half an hour. so mark, kick things off with how europe reacted to this. mark: janet yellen said the economy in the u.s. is in good shape. the path of rate hikes will be gradual. what more do you need for a rate hike rally? it was stronger earlier in the day. the three-day rally is the biggest in four months and it wasn't solely a stock rally. bonds rallied and the euro fell

for a third day. and this is the key index, the fear index, it felt the most since august 2000 -- august 27 2015. calm after the said rate hike record. betty: we are going to be talking about divergence. more data is coming up. mark: the drop in german business confidence was unexpected. they are in the foreground lower oil prices, does that damage the ecb's ability to reach its inflation target? we have the refugee crisis can that spill over and create a political crisis? the u.k. data was good. sales were stronger than expected. it reinforces the view. this is an economy, this is gdp

here and it has led primarily by domestic demand. that is better than no demand. resale -- retail did surge. the first full rate hike won't be until february 2017. we will see if ian mckinnon agrees, i sense he won't. betty: i agree. courtney donohoe has more from the news desk. courtney: the u.s., u.k. and france are going after the islamic state money. they are asking the security council to cut off sources of funds to the terror group. finance ministers want the u.n. to freeze the assets of traders and middlemen who fund. the u.s. and cuba have struck a

deal to afford regular airline flights. it was reached after three days of talks in washington. it opens the way for u.s. airlines to negotiate with cuba's government. the chicago mayor talk to federal investigators today in the probe of the city's police. the justice department is investigating possible civil rights violations. this comes after the release of the video showing the shooting of a black teenager by a white officer. the officer has been charged with first-degree murder. and politics can be a bruising game, just ask the prime minister of spain. he was walking through a crowd last night in his home region when a 17-year-old man punched him. the suspect is in custody. no word on a motive. the general election is coming up this sunday.

a french court has ordered the imf head to stand in a corruption case. it has to do with her role in a 2008 arbitration ruling that awarded money to a french businessman. she was the finance minister of france at the time. a prosecutor has said the case against her should be dropped but it has been ruled that she must go to trial. that is a look at the first word news right now. you can get more on these and other stories at the new bloomberg.com. i am courtney donohoe. betty: let's get more on the last story that she just mentioned. a developing story confirming christine lagarde. -- is in paris with us. you us more on the back story here? what exactly is christine lagarde being asked to go to court on? >> this case has been looming

over her for many years. it was under formal investigation into doesn't 14. the case goes back to 2008, she was the finance minister and she was asked to deal with an arbitration case. with a businessman. he said the state had -- in his sale of the stake in the german sports maker, adidas. and the state had to be paid -- had to pay $400 million of damage. earlier this month, another -- told the businessman that he would need to pay back the 400 million euros. so the case is far from being over. it could have serious implications on christine lagarde at her job at the head of the imf.

her job runs until july. her lawyer was speaking on french television just a few minutes ago. he actually said that this court decision of bringing her to trial is beyond comprehension. he doesn't understand the decision and he would recommend christine lagarde to appeal. she has five days to appeal. betty: you saw a statement from the imf saying that they support christine lagarde and they have confidence in her. is politics involved in this? give us a larger context. caroline: of course. it is a very political story. -- is a strong supporter of the former president. so it is also a political matter on whether the state actually did the arbitrage case in order

to keep the support of this businessman for the president then. betty: thank you. she will continue to monitor that story for us. let's get back to the economy. he said finally did it. they delivered the rate hike. markets arrived and we survived. investors generally appear to be relieved. at least in europe? here, not so much. mark: we have nothing to talk ever again. betty: goodbye. mark: larry fink said that yellen nailed it. >> the most important thing, what she gave the market is clarity. the opportunity they missed in september, when the markets were unsettled because we had no clarity on the actions, and in this case, they really express exactly what they are looking for. they have their forecasts going forward. mark: neil mackinnon is here.

good afternoon to you. -- the former research budget director said that this was the most crucial inflection point since 1929. and the fed's approval leads to prolonged worldwide deflation and a financial crash. do you agree with any of that? neil: i think he has made an interest in point. the ultra easy monetary policy that the fed has been lamenting for the last seven years is actually creating lots of bubbles, an explosion in credit. debt is higher than it was the time of the crisis. he is making a point that maybe the bubble is bursting. maybe now the cracks will start appearing. we see pressure in the high-yield and janet yellen

downplayed that yesterday in the q&a session. but he does make an interesting assessment in what is going on. whether it transpires that we are on the brink of a global or u.s. recession. mark: -- said where is the ammunition for the next crisis? you can refer that to the fed the ecb or the bank of england. what is the answer? neil: there isn't much ammunition at all. it is boxed in. it is left interest rates too low for too long and now does that the mercy of external factors whether that is china or a stronger dollar or whatever it is. it could circumcise the fed's ability to raise rates in the way that it will want to. mark: where do you stand? neil: i think they will go again in march but it will be

difficult after. there is a presidential election in november. not that they are necessarily obliged to do anything with the election but i think you have to know that the election will have a bearing. and we are sure what will happen to the u.s. economy. they are expected to announce an interest rate hike and then announce the economy was uncertain or the outlook was on shore. she said what she had to shape. -- had to say. the outlook is not clear. 2% growth, 2% inflation, pretty unexciting. betty: it is still certainly cautious, i would say, on the outlook. they seem to be more certain and that is supported by all of these charts. we will see four rate hikes in 2016, should we be pricing that in? neil: a good question.

the feds futures market is a different view then the foc members. not all dots are equal. what really counts is -- my guess is that it won't happen. i can't see that. the futures market is an entirely different view. they are saying that it will be 85 basis points by the end of 2016. i think the market is probably going to be a little bit closer to the out term. i don't see interest rates going up in the way that the fed envisions betty:. betty:it's interesting. do you think it's that the markets don't believe the fed? what is it exactly? the chasm that we are seeing? neil: i'm assuming that all of

these traders are stagnation us. you can understand why. the fed itself is saying that 2% growth is the long run rate and we won't get much more than that over the next few years. you can see why the markets are beginning to think that perhaps this is the way it is. this is the best it gets. of course, much depends on china. it may well be the people's bank of china that we should be watching. rather than the fed. it could be crucial and we have to see what happens to the chinese economy next year. betty: related to that, where do you see the dollar? neil: i don't believe the dollar is in a bull market. the fed's boxed in it can't do much on rates and that translates into a soft dish -- softish dollar.

mark: just before he go he said that the bank of england would go in february and since then we have had dovish payday to the boa was in the margin to be more dovish. retail data was strong. are you still going with a fed rate? neil: i am a traditional person. in all seriousness, the markets don't agree with me and -- is dovish. depending on the day of the week. it is a strong case for the fed. the bank's chief economist has told us that you can't signal that. mark: good for him. being brave. neil mackinnon. the market says every 2017, he

says february 2016. i can't wait to see if that comes true. [laughter] betty: as we had to break, we have breaking news right now. and brazilian billionaire is being released from jail according to attorneys for the investment banker. he was invested in november as part of a corruption probe. we will have much more on that story after the break. ♪

mark: welcome back to "bloomberg markets," live from london and new york. i am mark barton with betty liu. vladimir putin held an annual press conference today. he weighed in on turkey,

relations with the u.s., the economy and oil prices. ryan chilcote is here. three hours, a marathon by global terms. what were the firecrackers? ryan: first off, sepp blatter he said he should get the nobel peace prize. number two, he said that russia never said it didn't have any military personnel in ukraine. it said it didn't have any regular army personnel. his first acknowledgment that perhaps they did have troops in ukraine. and the best for last, just as he was walking out of the building, the reporter said what do you think of donald trump? he said, he is the absolute leader of the presidential race. he said that his relations with russia were great. mark: there was a quote, "if

someone in turkey decided to -- of americans of a certain body parts, i don't know if it was right or not." >> he was referencing the turkish president -- he also said there is a creeping islamization of turkey and that out of turkey and he would roll in his grave because of it. he threatened turkish jets. he said that if they go into turkish air space, god help them. more importantly, he was outspoken as usual and provocative and controversial and it came to turkey. when he came to the united states, he was looking to be accommodating. he went out of his way to say that the u.s. approach to syria and some of his ideas about the peace talks coming up starting tomorrow, russia is on the same page. so i think this is vladimir putin that is looking to deescalate.

betty: do you think he was tongue-in-cheek when he talked about donald trump? ryan: no, i think he was being absolutely serious. i saw the video. he probably was playing a game playing his trump card. [laughter] betty: that's a good one. ryan chilcote, thank you so much. let's go to abigail doolittle, she is live at the nasdaq. abigail: the losses here at the nasdaq are steeping as we trade down more than .5%. sanderson farms, the third-largest chicken processor in the united states cooked a disappointing fiscal fourth-quarter results today. chicken prices and exports are down. the stock is up. after dropping 10% this year

stevens, the investment bank, maintained the overweight. sanderson farms mayfly higher. betty: abigail doolittle from the nasdaq. and coming up, we have the battle of the charts. mark: we do. the tale of two what is it with you lots? ♪

betty: you are watching "bloomberg markets," it is time for the global of the charts. nothing is at stake but we take a look at some of the most telling charts of the day. brendan greeley is here with us and mark barton is as well. he is my cohost. brendan: everything is at stake. transatlantic pride. these are treasury break evens.

this is what you want to buy to protect. this is what the market thinks rmb two-year. they are picking and .5% inflation in two years. on the five-year they see more inflation, 1.2%. this is what the market see. let's look at what the same level of inflation with the fed, we have a lot of data. the fed projections, they have the two-year-old way up here at 1.9%. happy five here at 2%. i call that special said inflation sold. glasses. it magically gets them to 2% in five years. no one else can see it. betty: i think we will be talking on this for a long, long time. great job yesterday at the fed.

ok, mark? mark: we have been talking a lot about divergence between the ecb and i am done with the clock. i want to show you dividends. sometimes in life, simple charts , one line charts are the most effective. this chart shows that the yield differential, the thread between the german two-year and the western 2-year note. look at the yield, 133 basis points. that is the spread between the two. we are five basis points sharp of the highest since 2006 which is a coincidence. what is happening is that the ecb has double down -- has double down and the fed is hiking interest rates and i have led many analysts to believe that this spread, my beautiful

simple orange line is going to head higher and higher. there you go. betty: so that chasm is getting bigger and bigger. why you look perplexed? brendan: i don't understand how you failed to correct that angela merkel was times person of the year. that is the spike we are seeing. [laughter] mark: how can i respond to that. betty: you know what, then i can't the winter brendan greeley. he gets it today. that is your second winner -- that is your second win in a row. brendan: inflation likes me better. betty: we will end it here, we will say goodbye in the u.s. but you have a lot coming up tomorrow in europe. mark: a quick peek, we will look at the ftse index, a rally. we have had a three-day rally

and it has been the biggest three-day rally in four months. a big raise after the said hike tomorrow -- after the fed hike. britain is pushing for reform. david cameron wants to change the relationship with the referendum on membership promise by 2017. and don't expect surprises from the bank of japan tomorrow. half of the economist say it won't be expanding its monetary stimulus in the foreseeable future. that is it for bloomberg markets. see you tomorrow. ♪

>> it is 1:00 a.m. in hong kong. >> welcome to bloomberg markets. ♪

>> from bloomberg world headquarters, i'm scarlet fu. >> i am alix steel. here is what we're watching. martin shkreli is arrested on security fraud charges. he is accused of running a shell game after his hedge fund lost money. prosecutors will hold a press conference soon. we will bring you the latest. >> now that the federal reserve has ended the 0% interest europe, what happens next? >> larry think said the fed made the right decision but he thinks economic headwind is ahead. he tells us why he is not expecting 2016 to be a banner year for stocks. >> we want to check in on today's activity, let's head over to the markets desk julie hyman has the latest. welcome back. after the rally that we