from bloomberg's world headquarters in new york, good afternoon. here is what we are watching this hour -- stocks rebounding ahead of the fed decision which is now just two hours away. while a rate hike is unlikely, what does the fed's statement and thought lot tell us about future decisions. has to seeim chanos about the late inclusion of china a shares, one of its key benchmarks. and we have a national poll giving hillary clinton they double digit lead over donald trump. what's next for bernie sanders? we are halfway through the trading day. let's head to the market desk where julie hyman has a look at the latest. stocks bouncing around ahead of the fed because people want to hear what janet yellen has to say and what other members of the fed are saying

about how many interest rate increases they are predict and. all three major averages are higher, ounce around a little bit. withlooked at the s&p 500 -- s&p 500 versus oil prices. oil prices went south and it comingike both of them back. oil has been in focus with inventory reports showing a fourth weekly decline, though not as big a drop as anticipated. factory production pulled back by .4%, double what was estimated. that also seems to have affected the bond market. we have the two and the 10 here and yields going lower and took a turn lower after we got factory production date of. going into the commentary from the fed. and ahead of the fed, it is

worth checking on w.a.r. p. i've change this to look at the swaps market to see what they are protecting. we have a 50% chance of an interest increase not until february of next year. checking on the u.s. dollar, we've seen a decline in the dollar going in the same direction as rates. --talked about pound ballot pound volatility because of the impending brexit vote. a jpmorgan index of volatility is that hit highest in four and a half years. w.a.r. p with a twist. let's get a check on bloomberg first word news with mark crumpton in our newsroom. openedillary clinton has up a double-digit lead over donald trump in the race for the

white house stop a new bloomberg politics national poll shows mrs. clinton leading mr. trump 49% to 37% over voters. 55% of those surveyed said they could never vote for trump. he does have an edge when it comes to fighting terrorism. voters say he would do a better job. after the polls closed in washington d c in the democratic primary, mrs. clinton met with rival bernie sanders and the two spoke rightly for almost two hours. afterwards, they released statements about the dangerous threat donald trump poses to the nation. senator sanders will not concede before the democratic convention. u.s. secretary of state john kerry says iran should use its influence with syria us government to ensure their respective a fragile truce with moderate opposition groups. : it is very clear the

cessation of hostilities is frayed and at risk. it is critical for a general cessation to be -- genuine cessation to be put in place. mark: those comments came at a speech at the oslo forum following a meeting with the iranian foreign minister on sanctions relief. secretary kerry said u.s. patients with syria and its russian and iranian allies is wearing then. spacex launched a parent satellites in cape canaveral, florida. this time, the first stage of the rocket was unable to land on its drone ship. spacex says it lost the vehicle. it is the company's sixth launch this year. a carry to indication satellites into orbit. news 24 hours day powered by our 2400 journalists in more

than 150 news bureaus around the world. back to you. jumpedchinese stocks after sci refused to add the nation's domestic stocks to its indexes. says he is still bearish on the country. scarlet fu spoke exclusively with him and asked about the decision to rebuff chinese equities. : we don't feel vindicated on a decision by some index setting board including china. althoughmention that we have been short china since the end of 2009, the one thing we have never been short is the a share market. a good friend of mine has dubbed the a share market pigs on lsd. you have no idea where that market is going to go at any given time relative to the news flow and economic indicators, so

the a share market absolutely took on a moonshot in 2014 and then collapsed. whole episode, the government was seen to be ham-handed in terms of promoting people to get into the market and then on leverage, putting in op-ed every day telling people to get into the stock market will stop then, when it collapsed, putting journalists in jail, threatening short sellers and brokers. i think the decision as i read it tonight had as much to do with levels it did or liquidity or more traditional indicators. it was a sense that the a share market was a market in which the government was quite involved with and that scared people. scarlet: is it a setback for the chinese president who expend a lot of political capital on relationship and

fortifying the market? jim: almost every chinese leaders and smells a done -- -- sincese a tongue .ao has done it i think understanding china because it is a state dominated economy, you have to understand government policy over there as much as anything else. the very much -- the very first speech he gave tipped this off that he was different from his predecessors was a speech where he ripped into the old soviet union for being soft on perestroika and they should have rolled the tanks into the streets. that did not scream reform to us. one of the second things he did a month or so later, and i

thought this was interesting from an and it total point but also gives you insight into the guy with the ebb not that she admonished young adults to go to car shower and that models should cover. it gave us an insight into this guy did see himself as a sort of father figure for china, much different from hu jintao where china is open for business was the watchword. if you came in and made money, as long as you didn't upset the , go to macau, by your apartment in vancouver, have your mistress, we are not going to bother you. technocrat ands more cult of personality? jim: i think he has this powerful chinese party behind him.

he admitted his admiration for vladimir putin. he was the only state leader of any major import at the so chelan and had his picture taken with putin repeatedly. that gives us a little insight even though putin is not a communist, he is a nationalist. i think the season self as an emperor and i don't think he's leaving anytime soon. to understandve modern china with his crackdowns on journalists and his insist that set officers in the pla take personal oath to him, not just the party, which is fascinating, with his absolute paranoia about the internet, which he sees as its own power base, this is a different guy and mourn portly, to the people in this room, whatever your investment posture, it is an anti-western viewpoint. china is looking inward again, at least as it relates to

finance and outward as it -- regionaleasoner security issues, thus the south china sea islands, no lie zones and that sort of thing. is looking less to engage with the west than previous administrations and i think that jim real change stop david: chain is there speaking exclusively with my colleague, scarlet fu last night. up next, it is our mystery stock of the day. weather department is helping our pick. ♪

david: you're watching bloomberg markets. let's head to the markets desk and reveal today's mystery

stock. help in the weather department is letting our pick and its peers or reverse what has been a mulling this year -- julie: any guesses? david: maybe solar power? julie: do you recall -- the ?ofter side of fears it's all weather related. sears am a which has been an underperformer, down 50% over the past year, it has to do with analysts commentary on the weather. kohl's, butng about his commentary is benefiting sears as well. he says same-store sales were

held what he called a decent amount by warmer weather. he's speaking about late may and early june and says he's term butfor the long the commentary about whether is what investors are seizing on. sears is up by 11%. other department store companies are trading higher as well, so this is an overall effect, though sears is up the most. it's one of the most shorted stocks among department stores. this sector has in so battered by declining same-store sales. i'm looking at same-store sales quarterly going back to 2007. all of these lower bars mean declining same-store sales. it has only been one up quarter going all the way back to 2007 and most of the declines have then steep. has been trying to

turn the company around, not with much success, so you have the broader retail issue and then specific sears issues, but with retail, the weather can be important. david: switching to politics, the latest- bloomberg politics poll shows hillary clinton with a double-digit lead over donald trump. let me start by asking about bernie sanders, who met with hillary clinton yesterday, traveled back to vermont. willndication of when we hear from him again about what his next room will be? : he has made a pre-clear that he is not prepared to stop campaigning and that may be all the way to the convention before we hear any formal concession and support of her. but the process that is now underway is one where both the

candidates one-on-one and now we expect their staff to begin increasing the conversation about how they can meet in the middle. what platforms and proposals of ,is she is willing to embrace both in terms of policy going forward and if she were to be elected and in terms of the internal democratic party sort of stuff, how the nominating process works state-by-state, how the party's internal workings at the convention will work going forward. david: do people expect he's going to release the delegates he has before philadelphia? if he remains a candidate all the way to philadelphia, that will suggest he wants to bring his supporters with them to the convention. it's not entirely clear whether secretary clinton and her camp are concerned about it as long as there is not a fight at the convention. it may actually take six weeks for sanders supporters to be ready to get there and if he is

ready to working cooperatively, you may see a situation where it is more helpful to take some time to get everything out of everyone's system, say what wants to be said and then come forward. because there is so much division surrounding donald trump's candidacy and his positions with party leadership, the clinton campaign has fought itself the more time to get yearly together on the democratic side because unity is relative and there's so much disunity on the republican side. david: hillary clinton very much trying to position herself against donald trump. 49% of national voters say they support hillary clinton. this is a very recent poll. likely voters hold here after the attacks in orlando. what is the biggest take away besides that headline number? subtractedven if you

the libertarian candidate possible for and assume all of that is taking away from donald trump, donald trump would still be running behind hillary clinton and the momentum has changed and seems to overlap the controversy over latino judges, whether someone of mexican descent is inherently biased against donald trump. but there are a couple of interesting points to examine in there. both quinton and trump have some real problems. trump with trump university and clinton with concern over walls treat hate speeches and a controversy over her use of a private e-mail server while she was secretary of state will stop even though hillary clinton seems to be taking advantage on multiple fronts, the initial reaction is in terms of a terror attack, many of those likely voters give a slight edge to donald trump. baked into all of these it ended just, there's this undercurrent

that terror events or the threat and concern, either because she's a democrat, because she's a woman, because of trump plus tough rhetoric, whatever the reason, those are areas where she has some of vulnerability. david: thank you. time now for the bloomberg business flash, a look at some of the biggest business stories in the news. deutsche bank was to grow its wealth management business in asia will stop deutsche bank will add 25 relationship managers a year over the next five years a sin hong kong and singapore. bank of america may cut as many as 8000 retail banking jobs. fewer people are going inside banks to conduct transactions. the bank also plans to hire an unspecified number of sales staff. 'iconic flagacy's

store -- flagship store a threatening to strike. the store is not had a strike since 1972. big issues include health care, unpredictable schedules and pension plans for senior employees. that is the bloomberg business flash of a will stop still ahead, a florida real estate developer says he was to turn around a twice failed atlantic city casino. will look find him? ♪

david: this is bloomberg markets. atlantic city teeters on the brink of financial collapse, one brave outsider was to turn around a casino. we have more on the return of the rubble. remind us with the promise of the rubble was in 2001. what happened? it was supposed to be the

big project that was going to turn atlantic city around. chris christie, just before it opened said this was going to be the turning point for atlantic city. $2.4 billion and was supposed to be for high rollers, not her people paying slots. it opened with a lot of promise but it ended up being a flop. it made a lot of mistakes, it banned smoking and had a confusing layout, but the bottom line was it just had too much that and its ambitions were too high for looting and and that going bankrupt twice. it went up for sale and a florida businessman came in and picked up $482 million, just sense on the dollar. guy?: who is this does he plan to reopen it as a regular casino or does he have bigger dreams for it than that? guest: he has a lot of plans

will stop he owns distressed properties across the country. depending on when he is talking and hades talking to, you might hear different plans. what he told me was that it owing to have a rope climbing course, a water park, it's going to be a place for teenage sports competitions, and he's eventually going to have a casino because he says it's easy money. but in the past, he's said some other things like cryotherapy, atox, it was going to be tower of geniuses where people worlding to come to study problems and figure them out like nuclear waste disposal. at one point, he talked about housing syrian refugees. he has a lot of ideas. david: what does this lace look like today?

he plans on doing a soft opening all what does it look like today? guest: it is a big, shimmering, opulent looking building at the very end of the boardwalk. but when you look closely, the windows are still 30. it needs a power washing and there is some act of any in terms of him trying to have this rope climbing course in and there's work seeing done on the exterior, but he still needs his permits and he does not have the permits yet. -- david:this say what does this say about where atlantic city is today? the mayor says the city needs to gravitate away from graham -- from gambling. is there a plan to put that in place? trying, butity is for so long, has relied on casino gambling and you just don't see the sort of development you see in other cities.

slowly, they have maybe a couple of businesses open up, but they need to move away from casino gambling and the idea that -- it's sort of the old time thinking of atlantic city -- that one big project was going to change everything. the mayor says he would rather have multiple small projects than one big project. coming up, it has been a bumpy ride for the equity markets will stop that conversation is coming up next. ♪

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this is your global business report. the chineseing index. as proof that chinese

workers have more work about -- a final round of bidding for yahoo!. they are eyeing the company's internet core business. the big population continues to decline at a significant rate. we will tell you why that is significant in today's quick take. we begin in china were equities are now a three-time loser. sci has denied chinese stocks into its indexes and says policymakers need to make more disability to the a sharemarket. has toldn, rolls-royce employees it would be better if the u.k. stays in the european union. staying in the eu is best for workers, customers, suppliers. chanos spoke to bloomberg about the odds of a brexit. >> right now, the odds is 65-35

to stay. 75 or 82en as high as state. but it ise in, basically to a one to stay, not 50-50. david: the unemployment rate has unexpectedly dropped to its lowest level in almost 11 years. the british jobless rate fell almost 5% in the end of april. three private equity groups are in the final round of bidding for yahoo!. tbg and asts include partnership of sycamore partners and vector capital. they are joined by at&t, verizon, and quicken loans founder. time now for a bloomberg quick take. bees are dying at an alarming rate and nobody knows exactly why. be givers lost 44% of their colonies last year.

why we are stressing out and what should do about it. crisp apple, hateful opponents, and blueberries have one thing in common. crispbably got here -- apple, a handful of almonds, and blueberries have one thing in common. over the past decade, please have been dying at an alarming rate and nobody knows why. here is the situation. researchers began tracking bees in 2006. since then, beekeepers have reported losing 30% of their breeze in the winters -- bees in the winters. today, beekeepers are losing bees in the summer, when they should be thriving. in the past two years, summer losses have been equal to or greater than winter losses. annual losses reached 44% in 2015. what do these losses actually

affect? let's take a look at all the. california reduces 88% of the world almonds. farmers written beehives to pollinate -- rent beehives to pollinate the trees. the price tripled 1995-2010. environmentalists are pointing the finger at pesticides. they say the insecticides are unfairly targeted. one thing scientists agree on his multiple factors are stressing the bees outcom. argument.e on one side of the fence are those who avoid pesticide restriction. they say the loss of bees as not significantly affected the price of food. the european union recently restricted it in an effort to save bees.

farmers saw the rate of harvest fall 15%. on the other side are those directly intervening to the honeybee. they advocate for fewer pesticides and measures like more crop rotation to improve bees and get colonies back on track. david: for more stories, go to bloomberg.com. more markets coming up after the break. ♪

."vid: "bloomberg markets time no for a check of the bloomberg first word news. let's go to mark. mark: investigators are now focusing on the wife of the orlando shooter. abc news reports she may face criminal charges.

she told investigators she tried to talk her husband out of the assault. authorities say she drove her husband to the nightclub before the attack. she was also reportedly with him when he purchased weapons. ithe orlando mesko has that massacre has some republicans pushing to spend a couple of electronic records the fbi could sweep up in a terror investigation without a court order. legislation could come to the senate floor this week. a house committee voted this week to censure john costin. they say he lied under oath as lawmakers pulled whether his agency targeted groups. today's vote sends the resolution to the house, but speaker paul ryan has not said if he will schedule a vote there. it was a dramatic moment in a courtroom in south africa. double-amputee paralympic and oscar pistorius took off his

prosthetic legs and walked on his stumps. it was sentenced for killing his go and.a judge will impose the sentence on july 6. global news 24 hours a day powered by our 2400 journalists in more than 150 news bureaus around the world. david: appreciate it. you must stocks advancing today after a four-day decline that sent the s&p to a three-week low. now is chris. good to have you with us. chris: thank you. david: we are waiting for the completion of the fed meeting. not many people expecting much to happen. what are you going to be looking for today? chris: was next. the window closes and the window opens time to time. looks like next month, the window could potentially be

closed, so everyone will focus on september. david: you as well? chris: yes. futures suggesting less than a 50% probability of even in july. less than 15% in december. it is not when they hike. it is about what the message is around the hike. they want to see the window open. they want to normalize. they want the data to move in their favor and then you get an event that closes the window. jobs reports, i am not going to say it is an anomaly, but it is a giveback for the betterment of expected jobs in a very warm winter. expect that again in june, which puts the july meeting in question again. david: this is a buffalo market that groaroams. chris: it tends to roam for a long amount of time. very little money flow coming

into the market. a lot of risk aversion. at the least bit of signing of something negative that it does not understand, it runs the other way, and we saw that in january and february.we are likely to see that again in the summer . similar concern about the what if's. david: where are we right now? chris: we are midcycle on our way to lifecycle. the late midcycle phase is typically a year, year-and-a-half. this one will be a lot longer than that given the structural issues around the world, the global revenue, the anchor of negative interest rates, the central bank policy is filling the gap of the fiscal policy. this is feeling elongated. we will be in the normalization policy probably for years. david: you mentioned other central banks. what do you expect for the central bank of japan meeting? chris: at the end of the day, there will be a lot more coming from that part of the world, particularly the boj.

to the european part of the world about what they are looking for and everyone is looking for the ability to have stable currencies around the world and a little uptick in good inflation, not the scary inflation we all remember. the only way to get there for some countries is to weaken their currency to provide more stimulus. n has put aye damper on a love the policies. david: problematic to you that you see the yen and the market in different places. chris: no question about it. the value is there outside of the united states when you look at the relative valuation. valuation frankly's overall versus fixed income, the relative attractiveness is there. on an absolute basis, you can argue things are fairly valued across the board.in japan , there is very little growth catalyst outside of policy to get you to induce money to go to the market to push it back up. david: let me ask you about the decision yesterday. how big of a setback is it? chris: very small.

very very small. very little in the marketplace expected to happen. too far too soon at this point but on the way to become a member of the overall global market system. david: let me ask you about brazil. a number of investors bullish on that country's prospects. do you think it is a good place to invest now? chris: soon. it is a little early at this point. structure changes needed whether you're talking about infrastructure or the political system itself. privatization will be needed. you will need to see a structural change in the economy for a long-term investor to say this makes sense. only short-term side, if you're looking at the hedge funds or termr shorter because there has been such money blowout and the deep value level of where it is versus its history as well as the currency, some would say this is a short-term trade. it is too far to assume at this

point structurally and from a growth story, the need to reposition themselves a little bit away from being at the wims of their china buys. david: what role is that playing right now, the strength of the dollar? chris: the most important thing we can watch on a week to week, month to month, quarter to quarter, year-to-year basis is the dollar. strengthenedt, it 25% but it happened in 18 months. the weakening happened over the course of years. now, you should start to see a plateau of the dollar, which will help out the industrial sector, the trade sector, overall macro economic volatility. that should help the fed begin to normalize interest rates. it is hard for them to normalize with the strength of the dollar we saw. david: your calendar clean on june 23. you wanting a referendum closely? chris: yes. we will keep it clear. at the end of the day, it is

more uncertainty that is out there in the system. it is more reason why multiples will have a difficult time getting above the historical highs, which they are right now. david: last question for you. otherswith the fed and of the banks, how do you rebalance your portfolio? chris: we have been equity bowl for quite some time since march of 2009 across the board. there have been two other times we went neutral. last week and a half or two weeks ago, and that means across the board be risk neutral. still with a slight overweight of equities versus fixed income, but in terms of strategic allegations to fund whatever goals and objectives you have, being risk neutral, value is fair, earnings growth is a little bit below the cycle highs, you are still trying to come to grips with policy and the central bank policy., and there is a lot of unknowns in the political spectrum.

if you get double back to this summer, the opportunity starts to widen out again. some that manage well through this will have bargains to buy, some degree little bit of cash. rebalance in the summer back to your equity policies and get paid to eight. it is the number one thing. it is over talked about and overused, but there is a big reason for that. getting into late cycle, go more cyclical the defensive, by stick to dividend growth and areas that will give you cash flow while you wait for the world to vigorous help out. david: thank you very much. a quick check here on a major index. looking at all of them in the green. dow up. s&p 500 up a quarter of a percent. we await the fed statements here. coming up, a special on bloomberg television, bloomberg radio, bloomberg.com starting at

1:00 eastern time. thanks. ♪

david: this is "bloomberg markets." david west was at tgi america. the just concluded a meeting. he had an exquisite interview with bill clinton. one of the things they discussed was how to get the u.s. economy going again. we had declining middle class and rising property. then we had very high interest rates. now we have interest rates below inflation and the long drive after the crash -- drag after

the crash. we still need more public investment now. we need a national infrastructure program which should include clean energy. we need to double down on our investment in science and technology, which has kept our country strong. i spent $3 billion of your money to -- hiroshima. we can do no less for $1000 now and we have more than $100 billion in verifiable economics. it is pretty good wer return on investments. we spent the first $500 million on technology. i was in eastern kentucky and i watched undergraduates making nano satellites that can be put in $1 million.

right at the base of the appellations making these little satellites powered by computing power that was crammed into a little tungsten box about one inch and a quarter cubed. you have a big rate of return. since jobs are coming and going fast in our economy, we need to emphasize that. stop it, we need to screaming at each other and demonizing each other and figure out how to do it. david: that is former president bill clinton with my colleague david westin. nasdaq of a 35%. let's go to abigail doolittle live from the nasdaq. abigail: the nasdaq is up modestly.

fossil, tesla, and viacom trading higher. trading lower, one of the worst performers today, whole foods down more than 4%. the longest losing streak since the end of january. today on a downgrade. increasing competition in the natural and fresh food-base. advice check at $24. the we take a look at one-year charts, this reads volatility between the sellers and buyers is likely to break the downside some perhaps some bearishness for whole foods ahead. david: thank you very much. the outlook for mma in silicon valley. mark andreessen spoke with emily chang at the bloomberg tech conference in san francisco. >> we see more mna activity in the pipeline. we see more deals and consideration or a negotiation 4 years.in

i think what happened was the markets ebb and flow. the public companies sat back and watched all the drama in the valley and all the accusation and bubble, bubble, bubble. there is a lot of acquisitions that should happen that did not. now you find big companies, which by the way, most have done iteht well in the last -- quo well in the last five years and have to go shopping because they have to feel gaps in their portfolios. there are not many that it is big but there will be a lot of m&a for the rest of this year and next year. emily: who is going to get boston who is going to buy? >> that is a question every set of investors have to deal with. wayward with our companies to get in position where they can

be the buyers, but sometimes you get somebody who comes along and poses a strategic fit that makes sense. american tech companies are in a very good position to buy. the other things we are seeing is a lot more nontraditional buyers. we are seeing a lot more of the fortune 500 outside of tech that are going shopping. there have been a bunch of transaction in the car industry. there are companies in car industry and others that have gotten acquisitive. there will be a lot acquisitions to nontraditional buyers. emily: when are you telling companies now based on the overall environment. >> i believe it is true. it is harder to be a public company today than it used to be. we can talk about this for six hours. i can do the forecast and take my she will and put everything on the table -- shoe off and put everything on the table. i can do that.

it is harder to be public and go public. it is just observationally there are a lot fewer ipo's than there used to be. that is true. on the other hand, we believe the pendulum has swung too far against going public. that is where we are with our companies. we have created a team inside focused on ipo preparedness. what is the process to get ready to go public? not that you have to make the decision to go public, but what public?red to go is accounting, legal, governance, building a board of directors, executives, all these things you have to do to go public. what we find is -- emily: you are counseling them on ipo readiness. >> they can go and they have the decision. what we found is two things. number one, that often leads you to go public. at some point, it becomes an obvious thing if you are ready

to do it. you want to get the advantages of it. the other thing is the companies that do this and take it seriously become better even if they don't go public. they become more attractive as acquisitions because they become higher-quality companies. that is the process of maturation. a lot of the new companies in the last six or seven years are going through this. by the way, i think there will be a lot more ipos in 2017 and 2018 that there have been the last couple years. there are companies that are legitimately getting ready to go and will go. david: that is emily chang with mark andreessen. we have one hour away from the fmoc decision. was the bank decides is coming hat vfat decides is coming up next. ♪

>> welcome to "bloomberg markets " special report, the fed decides on bloomberg television and radio.

from bloomberg headquarters in new york, i am scarlet fu with tom king and michael mckee. we are one hour away from the fm oc's june decision. you have been up since 4:00 a.m. what is your first thought? microsoft is am i going to do this july 27, november 21? >> two weeks ago, this was a live meeting and brexit was dead. tom: we have a great set of guests. scarlet: we do. all of that coming up. my first thought is that goes way beyond the federal reserve because overnight, the swiss national bank. tomorrow morning, the bank of england there waiting in the wings. thought is itrst is not about that what because we know what they will do is

basically nothing. it is about the why, how do they explain it. do they say that they do they have seen, and we have seen some disappointing data lately, mean the economy is going into a slowdown, or is it a blip? how they explain that and going forward on matter a lot. tom: mine is simply the world will be watching. there is no question about that. not a big deal, but everybody will be watching around the world. she is central banker to the world. michael: she is central banker and a man who was in competition to her to be the central bank of the world, larry summers, published a new article calling on the fed to keep rates the same and to raise their inflation target. he says that that is making the same mistake they make over and over again. he says if you are raising rates --help the economy

tom: yes. my comment, it is so important that larry summers is on the zetnerage with th saying wait until you see the growth, which is what we hear. inflationaising expectation has been difficult enough with commodity prices taking. raising inflation is a challenge none of the central banks can't seem to get right. michael: a higher inflation target gets set, that will pull inflation up because it raises inflation expectations. tom: let's get right to this. withinot all that much the statement, but the press conference you may see markets move the two year yield at a .69 and then up we went, down we went. a higher yield in the last two hours. oil has been soggy. i am not sure how much that

is related. on to the next screen. this is a screen that is a little more malleable. this is stuff that will. .he dollar index the euro, 94.7. this is the benchmark. the one i would really watch within the new wants his -- nuances is the spread. indicator, recession but the vector is in that direction. scarlet: i will keep my eye on the dollar yen. japan is waiting in the wings ready to do something if necessary. tom: what do we see from china overnight? michael: nothing. they are data dependent on their own data and not as dependent on the fed. they have moved in anticipation of the fed, but if they will be on hold, there is no need. tom: is there an emerging market

proxy, the dollar and mexico has really weakened near record weakness.i am not sure what that means . will in move up the announcement? i am not sure. scarlet: in the meantime, let's get a check on the bloomberg first word news. >> thank you. orlando's mayor says the shooter threatened he strapped vests onto hostages, sending paramedics into the nightclub. the orlando mayor says the shooter told negotiators he was strapping explosive vests on to 4 hostages. the shooter was driving around the orlando area than for the massacre. 51% of americans disapprove of donald trump's response to the deadly shooting in orlando. 25% approve. that is according to a cbs news poll released today. 62% opposes plans to temporarily

banned muslims from entering the u.s. as for hillary clinton, 36% approval. of those a response -- 34% opposed her response. a child was snatched and dragged underwater by now we get in florida is presumed dead. they opposed because at the company resorts today is rescuers search a lagoon for the remains of the two-year-old boy. the attack occurred last night outside orlando, florida, in a beach area that is part of the grand caribbean resort. right now on capitol hill, senate democrats are filibustering over in action on gun control. connecticut democrat chris murphy is currently speaking on the floor. allowed one to interrupt him so he could talk about in control. he is backing democratic proposals to close a loophole that allows terrorist suspects to buy guns.

part of a campaign backing britain's exit from the european union. u.k. independence party leader one of 30 vessels protesting eu's fishing policies. bothessel was greeted by containing remain supporters. globaglobal news 24 hours a day powered by our 2400 journalists in more than 150 news bureaus around the world. tom: thank you so much. good morning everyone. good afternoon, rather. welcome to our coverage on bloomberg television and radio worldwide of this fed meeting. we haven't esteemed set of guests for conversation as we go to the meeting. what time is the press conference? michael: 2:30. tom: 2:30 wall street time and then we move on from there.

started? get let's get started with someone who may be market call of the year among major houses. it is the major at hsbc. how about allen's in your -- ellen zentner. she has been almost perfect. fabulous in saying this is a thread that will wait . congratulations on your call and let me say when will we see the rate increase that you said we will wait for? do we see this year? ellen: we are still sticking to a call that the fed does get a rate hike in this year. in an eery repeat of last year, they are able to do that in december. these are monetary policymakers not ready to throw in the towel yet. today in the statement and the accompanying dot plot, they are determined to get right height in this-- rate hikes

year. we don't think they can, but they want to. there is enough to drive optimism in the second half of the year if you are a policy maker, and they will continue to hold on to the hope that growth continues in the second half. tom: here is a quote that i like. let's bring up the quote if you would. the basic idea is the longer run dynamics, you think of short-term, medium-term, and longer run. the dispersion of the dots will shift somewhat more dovish. we expect new assessments in sweeping changes to potential growth the longer run and down equilibria rates. the word sweeping catches me. michael: there has been a big change in the way we think about how fast economy can grow. right now, janet yellen has said she does not understand why we can grow faster because it revolves around productivity and the fact that productivity has

gone away. we know the labor market is shrieking binds until you get some increase in productivity, how do you get a higher number? ellen: exactly. it is productivity that they often want to what they talk about we don't know if equilibrium breaks will pick up. these persistent headwinds were expected to fade and they have not. if you are a policy maker, you have to start questioning your endgame. the point you can raise rates to and how quickly you can get there. we have seen in a policymakers give these remarks publicly that we are expecting that to show up in those dots in the out years. while we don't think the story of today's statement will be the. coming down for 2016, we think the story will be what they do in the out years providing a somewhat more realistic path although it was still not be seen by the markets as realistic. michael: i guess to support hr, the question will be, wire we seeing the decline that we have

in labor markets and the inflation expectation? as you take a look at the chart of what has happened the last couple of months, a data dependent at has no particular -- fed has had no particular reason to raise rates at this point. ellen: i would agree. jobs growth has slowed. mark is a big question around the employment report and we need more data points to be sure that this is not just job growth moving into a slower panel, with would be typical in the late cycle, late phase of the business cycle, or is it the beginning of a precipitous drop that we see leading up to recessions? anytime there is a question mark around the data, the fed sits on his hands.it needs more data points . this is why we don't think it moves on rates this summer. the probability of a july rate hike is extremely low. i would never say zero. they have surprised as before.

i would put it extremely low. why is job growth slowing? janet yellen is worried about profits. we have come through five straight quarters of companies reporting declining earnings. that is unsustainable. if you are bleeding money, you don't hire more. that is why we think we are seeing the slowdown in jobs, but how big of a slowdown is the question, and we need more data. scarlet: are we at full employment? if so, does the fed acknowledged that orton said that -- or hint at that? ellen: it is a great question because many policymakers are showing us they think we are at the employment, but if that is so, why are we not seeing bigger acceleration in which growth that you were expecting to see.inset has said perhaps the natural rate of unemployment is lower than where we think it is. in fact, if i think back 10, 15 years ago sitting at a venue where she gave a speech, she

said i buy into the idea of this natural rate of unemployment, but i also admit that we don't know where it is. in real time, let's just gauge wage growth. if it is accelerating, we must be close. i hear her. potential growth of the economy, natural rate of unemployment, were the equilibrium rate of interest rates are, those are extremely difficult measures to get at, especially in real-time. every follow maker differs on where they think those are. tom: ellen zentner with us here from morgan stanley. looking at the market, it is a churn here with a 16010 year. -- 160 10 year. scarlet: next up, the dot plo t. where interest rates are headed. more of the fed decides on bloomberg television and radio coming up. ♪

michael: this is a special report "the fed decides" on bloomberg television and radio. it is perhaps the centerpiece of the fed's decision today, the dot chart. we want to go over what that actually is and why it is so important. the fed a couple years ago started putting out with its forecast the level of the funds rate that the members of the open market committee thought would be appropriate for the economic forecast. fortunately, wall street has taken that as a prediction. it is the law of unintended consequences so you end up with is dots that represents what the fed it should be two of the

market thinks. to the terminal rate, the highest the will go is much steeper than what the market thinks. they are still expecting two rate increases. this is priced in for the end of 2016. this is what the market thinks is going to happen, which becomes very important. the fed thinks they will get 3.5%. the market thinks he will get 75 basis points. for janet yellen today introduced conference, it is going to be about this gap. explain this. white as the events still more optimistic about where interest rates will go than the market is. scarlet: you can see all of that on bloomberg. still with us is ellen zentner. mike did a fantastic job giving us the outlook for the dot chart . the dot plot has come under a lot of criticism.

what is the value of the dots to you? ellen: i think it was very valuable when it was introduced orause it convinced markets put the money where the amount is of the fed, saying we will not raise rates for a long time. it was very necessary at that time. the unfortunate thing for the fed is the way this works as a body is what something is introduced, it is very difficult to take it away. once they started on the path of hiking rates, it becomes nearly useless. many policymakers have admitted bullard. just james nevertheless, it is here, so what do we do with it? the fed can now use it as a communication cool around anchoring the long end or expectations around the eventual path of policy. we think that is where we can be most efficacious in today's meeting by bringing the dots

down in 2017 and 2018. that is where they can bridge the gap. mike mentioned the expectations cap that the market is pricing one rate hike in every year for the next five years, which is unrealistic, but the fed showing unrealistically. they can close that gap so the fed can see more i to i with the market. unfortunately, the dot plot is here to stay. janet yellen has the opportunity with a q&a. michael: it sounds like for you and people who are trading, the most important thing is to bring the terminal rate down, the one that is all the way to the right hand side of the dot plot because that would suggest how fast they will move rates up, which is more important than how many times it takes them to get

there. ellen: exactly. the fed would be providing that all the branch to the market, saying we are not tone deaf. we are not going to mose through the right height until we get to the end game -- hikes until we get to the end game. there is a lot more room for the fed to do their. -- there. i think people will still watch the path for this year. i want to say it will be unexciting because the median will stay at two rate hikes, but we got the one rate hike. who joins her? i think there could be some interesting discussion there even if the median stays at 2 for this year. tom: i think you are dot plots are like smoke signals.

one-person publishing says they are nuts to raise. business loan delinquencies are on the upswing. let me combined that with something you know quite well over in a bloomberg terminal. capacitysses showing to utilization is rolling over way off the 45th year trend. for those on bloomberg radio, all you have to know is capu is the pulse of manufacturing. ellen, it is rolling over. ellen: guess what tom. earlier this year, we were pointing to the fact that a lot of this week his in the manufacturing sector was led by energy. guess what. it turns out you cannot have a dollar and your escape that. here it is showing that in the data. even if we set aside the effect of energy investment and the

dragnet lower oil prices have had on that, we have seen profits investment, earnings week and more broadly across the board and that is what is coming up in the manufacturing data now. that is a worrisome trend. there are other brought indicators in the economy that are still growing that have shown no signs of a peak. when the official arbiter of recessions takes a look to see if we are approaching recession, but certainly, the manufacturing data is not good. that would tell you that we have a nice rebound going on in q2 led by the consumer, but the poor investment overs have not changed. -- numbers have not changed. tom: scarlet, i put this chart as we put all our charts on bloomberg radio plus. it is worldwide. scarlet: you are staying with us. we have much more coming up on bloomberg television and radio. we are less than 40 minutes away

from the fed's june decision. you can tune into bloomberg radio anywhere around the world.also on sirius and xm . ♪

scarlet: this is a special report "the fed decides" on bloomberg television and radio. stress and a look at how it returned to the global market in the past week. what we have is the bank of america global financial stress index and how it has really rocketed higher. up 126% in four days. the events and move index which measures volatility in treasuries has climbed, but they have both eased. there is a lot more stress and markets. ellen, to what extent

does the federal reserve acknowledged this? ellen: is a good question because the fed in general does not react well to late breaking news. what we expect out of the statement or the tone of the statement, we can use janet speech as ae 6 guide which he acknowledged financial divisions have east and you compare them to the prior meetings this year. in economicbound growth that is underway driven by the consumer, but there are lingering worries like international developments and slower job growth. i don't think that in the statement we get something that makes it sound like financial conditions have really ratcheted higher because that has only been in the last few days of markets have opened up and said runs it is a real possibility -- brexit is a real possibility.

on theves it more worried side and the q&a, slipping up more latebreaking news there. the fed likes to wait and see how these eventually seep through to the economy and outlook. michael: we are seeing global financial stress go up. a lot of that is brexit. in the u.s., the stress index has come down a little bit. people are saying because we don't think the fed will raise rates. if that comes out with a hawkish statement, we can see that change. scarlet: exactly. ellen zentner stays with us. this is our special report "the fed decides." ♪ get ready for the rio olympic games

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x1 will change the way you experience nbcuniversal's coverage of the rio olympic games. call or go online today to switch to x1. >> this is a special report. i am scarlet fu along with tom keene and michael mckee.

let's get you started with a check of what is going on the markets right now. we have the dow and s&p slightly higher. oftec up by about one third 1%. tom, you're looking at the two-year. tom: what is interesting is i know we are doing a foreign section here and that is appropriate. know, maybe it has to do with two chancellors on the stage today, but the fact the data screen this time around is typical of most fed meetings. >> the prime minister did not consult the central bank calendar around the world. help if we knew what they would do. scarlet: a big cloud is hanging over the markets.

two investors are waiting. jim chanos tells us yesterday in an exclusive interview that the he does not bother trying to predict the outcome but where bets have been placed. right now in the betting market, high,35, he had been as and if you are a betting person it is to-one to say and not 50-50. meanwhile, "i believe it is over holding. tom: in on this, if you word. -- if you would. all you need to know is on the z axis, here in columbia blue of

40. that. never seen francine is brilliantly showing the volatility this morning. formally the dean of economics in columbia, and now of course global strategic advisor pimco and we continue with alan of morgan stanley, who has an dead .n i know you're going to tell me we should ignore grexit. janet yellen is not going to ignore grexit. how does she for that into her federal reserve mandate? >> it is a great point. obviously the fed takes into global development spirit when we have global uncertainty, intends to --engthen the dollar your dollar. but i will be looking for in the

press conference is the extent -- really a more fundamental concern about the u.s. economy. we have had one soft data point on the labor market, which does not seem like enough of a reason to change course. i will look at that today. >> we could see a problem with equity markets. fed will watch the feedback into the united states economy. with the group gaining ground, we are not seeing this in the united states. think it is a repricing. , othero get to a concern countries in the union,

certainly we do see credit spreads and the u.s. has widened out. there is an impact out beyond what you see on the dollar. if you look at what we are seeing in the u.k. with the pound all over the place and a slowdown there, does the fed put more weight on what is going on in china with the u.k.? >> they can wrap it up in a general fashion and say international and economic development abroad that affect financial conditions in the u.s. encompasses everything, similar what encompasses everything about the labor market. there are evils in the world that lurk behind every corner. today and sixna then youom now and will have big events that are more immediate like grexit. encompassesaccount

all of it. what i think it's unfortunate -- unfortunate is the timing of it also takes away some of the impact we would get from jenna -- janet yellen's's testimony. of a good a waste testimony. we could have gotten really nuggets from that except there laterooming guerrilla two -- >> time and time and time and time again, we cannot get it going. we roll over because of weak economic growth. we are waiting. allen, when do we do it? >> you can hear from the horse's

mouth. i scum i canat if call directly. i waited to see on bloomberg instead. showf the things in this as well is the negative feedback loop. goes, negative- so they have to pause or take care. growth has been very strong and we do not have that same kind of act drop today. would you please explain when we get back to these economics? i think the fed has embraced the notion we have talked about for a few years. the reason for a gradual rate hike cycle is the policy rate is low and rising gradually over time. you talk about the labor market,

average hourly earnings running at 3%. we are approaching full employment. kickoff.me i do not think we should be too dismissive of the basic holding blocks. the key insight is there is a new neutral and they need a gradual lift off to a low death and nation here that is why i am look at longer today. scarlet: we do have another chart and you will pull that up for us as well. >> it is what rich was just talking about, the idea that inflation expectation has gone down. this out on bloomberg radio as well. the blue line is consumer expectations are at a record low in the university of michigan survey for inflation. the markets have been pessimistic for inflation for years.

the economy is muddling along. we are not seeing major disinflation anymore. >> they have been doing it for a number of years and it tends to involve -- evolve slowly. ,he mentioned in philadelphia if i were fed chair, i would pay attention to it as well. survey measures get overly influenced by energy or gasoline prices. be.e does need to underlying inflation in the economy, the fed target is moving up. we need to knowledge that is well. scarlet: as we wrap up at a time of political uncertainty rising, are we seeing the limits of monetary policy and central-bank

policy not just in the u.s. but around the world? >> with policy near zero or even negative in some areas of the policy has run its course. we do not have us much in the toolbox as we used to. this is something janet yellen and company have embraced and why they still feel that if you are this close to zero, you have to be extraordinarily cautious in the initial steps you take to tighten policy p are you maintain that tightening bias, and tighter wage markets, tighter wage growth, but you also understand you need to tread lightly and cautiously. thank you so much. good of you to join us. we will continue at global market strategist. we welcome all of you around the world. european interest rates on the close, and -.11 five in the

german 10 year, back to a negative yield this morning. we are worldwide on bloomberg radio. good afternoon. ♪

scarlet: this is a special report. i am scarlet fu. due out in just under 20 minutes. michael, when you look at what is going on here, and the fed all theseeep in mind different headwinds come along with the week jobs report, it

has got to walk a fine line when it comes out with the statement. explain why to they're doing what they are doing to it is not just what they are doing but why. let's look at the markets view. this is where the fed influence what is going on parity look at rate swaps going forward five years. basically, the 10 year treasury yield up top is showing you where the market thinks the 10 year yield will be halfway out in a five-year time. you take out the 10 year yield and you can see where the market thinks the interest rate in the market is. it is below zero at almost a record low. reason.et sees no >> is there a reason it is in denver broncos colors?

>> until september, they are still the champions. the markets do not think there is any reason to tighten rates out five or 10 years paired if i drew the line longer, if you inld get swaps that far out perpetuity. what i would say, the markets are saying they do not ask that there to be much of a rate hike. are weighing several scenarios. a 60% chance of a hike but then a 40% chance of zero. you get an average somewhat below, but you are right that what you see consistently is a gap between the markets and it is the dock that shift down. that is just a reality of the way the markets have used this. >> what will it take to change the market view at this point? we have inflation lot -- rising lower.

which is are going up and equities are not falling of they are having trouble but basically things are moving in the right direction. >> things are moving in the right direction. i think part of what is going on here is janet yellen has a difficult communications challenge. number ofback a decades, in my lifetime, it is the first rate hike cycle where inflation is too low. we are hiking but we want higher inflation. it is a tough message to convey and they are having a challenge conveying it. she used to the word uncertain 13 times in a six page speech. look, a lot of uncertainty and i guess the markets embraced that notion and i do not see any rate hike in the pipeline. scarlet: uncertainty and caution and also on the one hand and the other hand. write whereto richard was. humor on the other

end, unlike mr. trump. in keeping with that tradition, i will turn to the less positive. she talked about in undershooting of the unemployment rate considered to be normal in the longer run and would lead you into the idea of what they would do with timing. help us with this. how orthodox is the meeting today? or is this not under the textbooks we used with columbia? >> it is but the reason why is we had the fed hiked rates. what they are saying and fisher has made the point well, policy accommodation is measured by the real interest rates. fund rate is below inflation. it is still very accommodated. as a gradual move

-- removal of accommodation. late -- rateent below, banks do not like to they want a tight labor market to push up inflation and push up wages. this is not your grandmother's or your uncle. tom: a lot of the uncles and grandmothers in those candidates have a great loss of credibility with institutions. it 12 minute before this decision, how does this institution, your fed, how do they get back credibility with mr. trump, with dr. paul, and the others? how do they pull them back into the central bank fold? specific not get into candidates, but broadly, the bank of japan and the ecb, certainly, because of what they felt it was necessary to do in the crisis, they wandered into

the sandbox of fiscal policy and traditionally, that is done by congress and the president and the treasury and it is not done by the fed. i think it is inevitable. i think there will be political pressure on the banks in the future. tom: we will continue and again my, vice chairman. michael: still ahead, before janet yellen's news conference, briefings that you need to move out for. that is next on bloomberg television. ♪

michael: we are moments away from the fed decision. they are going to put a statement out at the top of the hour, giving their reasons for what they do, even if they do not do anything. to watch for in the statement, we will ring in rich from pimco and play a little game. here are the things they will have to look at your the labor market inflation expectations and global outlook. let's look at labor market expectations here it in the last statement, the fed said that labor market conditions have improved further, even as growth in economic activity appears to have slowed. keep it or change it? >> change it. >> what do they say? theyey may reverse it and may say the economy has picked up from q1 but the labor market appears to have softened. you think the market panics at that if they do that? >> no, i think janet yellen gave

a strong hint of that in her speech. she could have chosen to say it is one data point. downgraded. will inflation conference -- conversation remain low. little changed on balance in recent months. the michigan number, enough to change it or keep it? isyellen indicated she following that closely. i think the trick with changing it is, it is a close call. they will change it though. the last thing is the big change they made. they took out the extensive line about the global developments. the committee continues to

closely monitor indicators and a global economic and financial developments. do they just leave it at this point? >> i think they leave it unchanged. tom: do you realize it is at the dining room table. >> that is frightening. >> it is planned. >> does the fettig knowledge that household spending history ok? retail sales to better than expected. it has it -- it has been holding up. >> q1 was very soft and q2 is shaping up to be growth around 2.5%. possibly, consumer numbers have been good. they want to knowledge we have had a pick up. they need a pickup for a year to play out. mike, when was your first fed meeting with burns?

how did we get to these statements? put up one of those quotes again. no.remember yes or first statement, we change rates. we might do it again. we now have these statements. markets,worse for the added clarity, or is it better for the market to have more information? >> i think the challenge for the fed is not to have too much information, but they have to understand what the reaction is. it promises the committee itself. a different mix on the committee, we would have different dynamics. that is the challenge.

>> does that get conveyed the way they vote? votes have been unanimous. up in the not show voting but it does show up between the meetings. noise is tough to this in tangle. >> we are less than five minutes away from the fed decision. the former philadelphia fed president, he says the downside to a consensus vote is language. if you cannot vote what you want to vote, you have to catch everything in those terms with tom was confused. here, isal innovation to have the regularly scheduled

press conference where the chair can use the bully pulpit to give her read of the situation. ben bernanke used that well and i think janet yellen has used that effectively as well. >> right now on overshoot, it showed up a lot. maybe overshoot is the new slack. onave put the chart out bloomberg radio plus, but it is up, asures of cpi going phrase from rudy who tragically died a number of years ago. can a central bank manage and over shoot or are they dreaming? >> it is a good question. overshoot.y want to they will not be happy with an inflation target.

on the othernd, hand, they have been below average for five years. they may need to engineer a modest overshoot. they do not want to overdo it and that is why they are getting too coy for my shoot. tom: equities, bonds, currencies, i will add a balancing in the equities markets. the two-year yields lower and lower. 1.61 in oil. out.rt to help >> we're looking at a five year yield. most effected by what the fed does today. it has been volatile.

going into the morning, they come back again. scarlet: what type of reaction did we see to the numbers that came out this morning that show a little bit better than anticipated by economist's? >> not a whole lot. it feeds into the idea that things are getting a little better out there. general, the numbers are not that bad. >> way more international than i ever have done. stunning. still 105 and 92. it is a big deal. noticingour ago, again , a two yearsees up

yield. very quickly, the german two-year negative 0.60, german 10 year, all you have got to mostis this may be the international meeting i've seen that the chair has to face. >> absolutely. it is not just germany. u.k. falling as well. i am focused on dollar yen's here. it is in our something the bank of japan cannot like it all. the standardut deviation move in the dollar yen over the last couple of weeks. the bank of japan needs to step in as well. you need to keep it very -- has to follow up with his meeting later on. is the same as they do not know what will happen in the grexit vote. the feeling is maybe they have to wait as well.

>> they would love to know how the bricks will vote. >> take a look at how it is trading at the moment. open all over the place in the lead up to the grexit. at 14160 we want to check in with erik schatzker, who is live. in interest rates. the fed in a unanimous decision is holding at a quarter percentage point. what is holding is the outlook, the outlook for rate increases. fed,er big ship by the lower for longer, i repeat, lower for longer, everybody. a majority of the members of the federal market committee still increases by the end of the year. six now favor only a single 25 racist points hike.