welcome to "street signs." i'm joumanna bercetche >> i'm willem marx these are your headlines president trump uses his speech at the u.n. to slam iran and opec but comments of his time in the white house draws a mixed response >> my administration accomplished more than almost any administration in the history of our country america's -- so true didn't expect that reaction, but

that's okay. >> european equities trend lower let down by autos. the head of the policy decision is already priced in. italian deputy prime minister warns his country will pull from the budget if his demands are not met. and a loss for ubs but a gain for santander there is a new ceo in what could mark a shift in strategy for the retail lender. we're about an hour into the trading session. i want to dwell a bit on u.s. markets. we have that central bank meeti meeting today. the fed is coming up widely anticipated to hike. markets are mixed going into that

we saw the third negative session in the row for the s&p, even though for the quarter it's on track for the best quarter since 2013 the last couple of days, price action has not been that positive generally speaking it's been a strong quarter the mood overnight was better. we saw relief in chinese equities there there was a report from the msci saying they are considering increasing the weight of equities in their indices next year we saw a bounce in the nikkei, up 0.3%, touching its highest level since january. that was the picture overnight in europe we have a dented mood. we're down about 0.10%, slightly weaker heading into the trading session today. let's get into the individual markets. the mood is a bit sour in europe the ftse 100 around the 7,500

mark watch out for jeremy corbyn's spe speech later today the xetra dax, focus is back on the political back drop. this as the cdu's party whip was pushed out one of merkel's loyal colleagues is out of the administration that raises a few questions about her political future as well ftse mib, all eyes on the budget discussions. it is central bank day, so we'll look at fixed income today all eyes on what the fed is likely to do they'll likely raise interest rates by 25 basis points they'll get their updated projections for 2018, 2019, 2020, and 2021 dots. people will look for

modifications in the language. going into it, the ten-year yield close to seven-year highs. lots of questions about what that could mean for equity markets. italian yields had a good day yesterday. we rallied about 8 basis points going into the budgetary discussions. willem >> thanks. president trump has renewed his attacks on iran at the united nations on tuesday he accused the iranian government of s eshgsowing chaos iran's president responded that u.s. sanctions amounted to economic war he also suggested that trump suffered from a weakness of intellect. andrea mitchell has more detail on the speech to leaders at the u.n.

>> reporter: the america first president, strutting on the world stage. >> my administration has accomplished more than almost any administration in the history of our country >> reporter: a boast prompting marking laughter from the global audience [ laughter ] >> didn't expect that reaction, but that's okay. >> reporter: a year ago at the u.n., the president threatened to destroy north korea, if necessary. today, planning a second summit with kim jong-un and praising kim for his courage. >> the missiles and rockets are no longer flying in every direction. >> reporter: now the president directing his fire and fury at iran, after withdrawing from the multicountry iran nuclear deal, promising crippling u.s. sanctions in november for iran's missiles and support for terrorism. >> we cannot allow the world's leading sponsor of terrorism to possess the planet's most dangerous weapons. >> reporter: even though u.n. inspectors say iran is still complying with the nuclear deal.

four hours later, iran's president accused the u.s. of trying to topple his government, and saying iran could be open to resuming talks with the u.s., if sanctions were scrapped. as he told lester yesterday. >> translator: that bridge must be rebuilt >> reporter: the president's overarching theme today, after decades of american burden sharing around the world, he's now saying, in essence, it should be every country for itself >> the united states will not be taken advantage of any longer. the united states is the world's largest giver in the world, by far, of foreign aid. but few give anything to us. >> that was andrea mitchell. the u.s. president refreshed his attack on opec accusing the cartel of extortion through high oil prices >> opec and opec nations are, as usual, ripping off the rest of

the world, and i don't like it nobody should like it. we defend many of these nations for nothing, and then they take advantage of us by giving us high oil prices. not good. we want them to stop raising prices we want them to start lowering prices, and they must contribute substantially to military protection from now on >> u.s. treasury yields extended their climb as the fed enters day two of its september meeting. the central bank is widely expected to deliver its third rate increase of 2018 today with analysts anticipating a quarter point hike i'm happy to say our guest is joining us on this all-important fomc day talking about expectations from the fed, today is really not

about the interest rate hike, that's pretty much priced in you could say that for december as well. going forward, how many hikes are you pricing in or expecting out of the fed in 2019/2020? the feeling i get is some analysts are dialing back expectations of how aggressive the fed can be in this vi environment. >> our view is after the rate hike today we'll probably get another three or so that would take the fed funds rate to 2.75 to 3% range, which most fomc participants think is neutral. so a rate hike in december that's pretty much baked in because the economy is strong. then probably two more next year >> and do you think that the size of the balance sheet will matter in terms of where they end up getting to? reason i ask this is because when we initially started talking about quantitative tightening the interpretation

from the market is that it would lead to higher yields. that has not transpired. ten-year is around 3%. we've been dithering around here for a good part of the year. does the eventual size of the fed balance sheet have a bearing on where the ten-year yield gets to >> i think it does we don't know when the fed will end the rundown of the balance sheet, at what size. our view is that they'll probably be done reducing the balance sheet by the end of next year so fourth quarter of 2019 they may end. that means that you won't get that much upward pressure on yields so this is why yields may go up further, but as soon as the market realizes the fed may be done with balance sheet runoff, then we get a stabilization. >> so what level do you see that happening? >> tough to say. easily we could go up to 3.25, 3.50 but these would be levels where we find treasuries attractive

again. >> as the fed sheds its balance sheet, as the ecb ends asset purchases what does this tightening mean for labor markets and the real world >> i think we're in an environment where we are late cycle. it's not end cycle yet if you use a tennis analogy, you could say we started the fifth set, but in whim whim thereimbln tie set, so it can go on for some time. so we see the global economy growing but slowing going into next year. that means labor markets could tighten more, inflation is picking up from low levels that's typical for the late cycle. growth slowing, inflation rising, that means we will get closer to a stage where the recession might be on the horizon. >> optically speaking, looking

at the numbers, inflation is at target unemployment is also at target yet the fed fund is about 100 basis points lower than what people say is the neutral interest rate. do you think the fed runs the risk of going too slowly here? >> i don't think so. i think the risk is rather they go too far, too aggressively the risk is rather they're guided by the data the growth data is strong. so they keep going until something breaks >> all right stay with us we'll discuss more on that after this a slightly different topic altogether whale watching in london's river thames some expect say this white mammal swimming in the river is

a beluga whale one whale conservationist said this is the most southerly sighting of a beluga around the uk shores. >> if you have any views on whales or the fed, which is equally interesting, follow us on twitter, @streetsignscnbc. coming up, we're live in berlin where a political upset at the bundestag has raised the pressure on angela merkel. i know that every single time that i suit up, there is a chance that's the last time.

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welcome back to "street signs. members s of angela merkel's y have removed one of her allies volker kauder was head of the christian democrats for more than a decade, but his own deputy, ralph brinkhaus defeated

kauder in a surprise vote. our colleague, annette, is in berlin does in move mark the beginning of the end of merkel's chancellorship >> well, if you talk to people on the ground that could clearly be the case. the chancellor is clearly weakened after she lost that vote she personally didn't lose it, to be technically correct, but she was lobbying for volker kauder very emotionally people are telling me and that is not something which she normally does. so it was very dear to her heart that volker kauder was winning that election. the parliamentary group of her party has not followed her she is clearly weakened. i caught up with one of the leading figures of the fdp, which is an opposition party, the liberals, i asked whether he

thin thinks angela merkel is weakened after that vote. >> she is weakened if you go into your own parliamentary group and say i want this guy who i worked together with 13 years to be re-elected because i like him, he's my guy, i can work with him. and then another says the same, and then as a result we get something nobody expected. journalists didn't expect this i thought it would be 60/40 for kauder then you are weakened, you underestimated the feelings in your parliamentary group and you underestimated how much pressure there is to do something new >> let's look at what that means for her standing overall is that the end of an era? is that a revolution like some

call it? what would you call it >> it's neither of the two i think it's the slight going down of angela merkel. it is -- i was a junior staffer in 1996 to 1998 when koole was still in you have this great foreign politics, you think she is the leader on the european level, which i think she is, but you can already see even though some parties are working okay here and the economy is working well, you see new things, new problems that come up right-wing problems we have and everything there is no answer it is this -- maybe it's not a burnout, but you don't react to those things you normally would have reacted to years ago. i think this is what we'll see in the next years and months the next days will be decisive >> germans have a feeling it was a loss in politics

it's a year since we had elections here still it's an ongoing struggle to have that coalition ongoing there are so many scandals for german politics, just shortly before the summer break. the coalition was breaking up, we had this crisis surrounding the former head of the spy administration and this is something germans don't like so clearly that last term is a huge challenge for merkel. as i was saying, she's clearly in a weakened position the next big events will be the bavarian elections, then the elections in the federal state at the end of october. if the cdu will have a very poor showing in those elections, that will clearly further weaken her

position then we have the general convention of her christian democratic party in the beginning of december. and that's where she needs to get re-elected at the head of the party. if she has a poor showing that might be the end of her political career back to you. >> thank you very much santander unveiled dealmaker andrea orcel as the new ceo starting next year he will replace jose antonio alvarez who will become vice chairman orcel was a key dealmaker in the tie-up of ambro and rbs a decade ago. the ceo of deutsche bank says trade tensions, brexit and trouble in turkey could all prove to be a crisis cocktail. speaking separately the cfo told

an investor conference in london that the current macro economic backdrop is good for banks. investors should prepare for a global slowdown next year as trade uncertainty and excessive rate hikes remain key risks, that's according to the latest report by pimco. the global economic adviser of pimco is with us i was catching up with the former colleague and a friend of minute yesterday, he asked what do you think the world will look like in 2019 i'll pose that exact same question for you hopefully he's watching and can get a good answer. >> i think 2019 will be a bit closer to the end of this cycle. we're in the late hicycle environment. next year growth will be slowing. we're still growing but slowing as central banks remove accommodation. i think you'll see some drag from the trade tensions we've seen this year this will also come through.

next year markets will be revising up their estimates or recession probables for 2020, 2021 >> so we've had the trump administration say that if the chinese react to the last set of tariffs, then they will be prepared to impose tariffs on all chinese imports to the united states. the chinese did react. if the trump administration follows through with that thread, what is to stop a global recession? >> if that really happens. if the u.s. imposes tariffs on all of china's imports, if china retaliates with other measures, for example, by letting the currency deprecate aggressively, i think they could in that case by 10% that could get us close to recession that's our scenario for next year we don't think the trade war escalates in that way. if it did, growth could come to a standstill >> we are seeing chinese numbers

slow on that point, even before the whole trade tariff discussion kicked off. now we see export growth slowing. there's concern about where this will lead to, the trade narrative, but also they were attempting to deleverage i was looking at numbers this morning that show non-financial leverage in china has gone up the first quarter of the year. so they're trying to do the right things but they can't because they're attempting to keep the economy shored up something has got to give. how much of a concern for you is china and the prospect of a not so nice landing in 2019? how much of a concern is that to you? >> it's a concern that growth is slowing. however i think their definition of deleveraging is different from ours. their definition is that they're slowing the growth rate of credit rather than contracting credit i think you are seeing signs they are starting fiscal still

lis. so china will offset by doing more infrastructure spending we see a fiscal expansion worth about 1% of gdp next year, and this will cushion the slowdown we'll still get a slower growth in china that's not good news for the global economy we've seen peak growth at other economies as well, in europe, in japan, peak growth happened around the turn of this year, now growth is slowing in the u.s. the fiscal stimulus will also start to fade during the course of next year. >> picking up on what you said about europe, you are not expecting the ecb to hike in 201 2019 >> we think there's a 50/50 chance they will hike next year. the reason we think the rate hike may come later is that we are not as optimistic as the ecb on inflation the ecb staff has a pick up in

core inflation draghi talked about it yesterday. he talked about this being a vigorous increase in core inflation. we think the increase will be more gentle. that means the ecb will not reach its target any time soon that's why i think they will push out the timing of the first rate hike. also i think they will want to see the euro weaker. then the issue is if and when the fed stops tightening, there's a risk if that's the time when the ecb wants to hike rates that the euro appreciates too much that's why the ecb will be cautious and a rate hike next year is not a done dell yet. >> balancing effort as ever. thank you so much for joining us on "street signs." theresa may says it would not be in the uk's national interest to hold a general election before the uk leaves the european union

she traveled to the u.n. general assembly and may once more vowed to secure a good deal with the eu she also said a canada-style agreement with the bloc was a non-starter. >> i said no deal would be better than a bad deal you talk about a canada-style deal, that's not on the table. it's not on the table for the united kingdom what is on the table from the european union is effectively breaking up the united kingdom by having a trait agreement with great britain and keeping northern island in the single market and customs unit, creating a customs border down the irish sea. members from britain's labour party have backed a motion that calls for a public vote on brexit if parliament rejects the government's deal with brussels. labour's point person on brexit told the annual conference that the uk should not be forced to choose between a no deal or a bad deal >> when it comes to that vote in

parliament, we do not accept that the choice is between whatever the prime minister manages to cobble together or no deal that is not a meaningful vote. between really bad and even worse? no deal would be a catastrophe no government has the right to plunge our country into chaos because of their own failures. coming up, the italian government will unveil its budget spending targets after months of in-fighting. find out the latest warning from luigi dimaio after this break. - i love my grandma. - anncr: as you grow older, your brain naturally begins to change which may cause trouble with recall. - learning from him is great... when i can keep up! - anncr: thankfully, prevagen helps your brain

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welcome back to "street signs. i'm willem marx. >> i'm joumanna bercetche. these are your headlines president trump uses his speech at the u.n. to slam iran

and opec but his comments about achievements in the white house draws a mixed response >> my administration accomplished more than almost any administration in the history of our country america's -- so true didn't expect that reaction, but that's okay. >> european equities trend lower let down by autos ahead of the fed policy decision where a third rate hike has largely been priced in. and italian deputy prime minister luigi dimaio warns his five-star party will pull from the budget if his demands are not met. and a loss for ubs but a gain for santander the spanish bank names andrea orcel its new ceo in what coul mark a shift in strategy for the retail lender.

the italian government will announce its 2019 spending deficit and debt targets tomorrow, this is after weeks of disagreement inside the coalition. the liga and five-star parties have been pushing for the things they campaigned on, universal income and a flat tax. both raise the possibility that the italians will break eu budget rules but the finance minister, geovanni trtria promised to kee the numbers in check luigi dimaio said he will go away from that budget if his party's numbers are not granted.

the finance minister wants the italian deficit to be around 1.5%, a level that would likely keep brussels happy. earlier this month tria said the government's reform program should be gradual and respect ee government to be brave when it comes to the budget and that the finance minister should not be afraid of higher spending. and for his part the actual prime minister, giuseppe conte, has remained mostly silent about the budget but he did say the government should not get hung up over decimal points we are joined by the ceo of rosa and rubini. mr. tria seems to be under pressure, but he's a man

appointed, put in place, and backed by the president, sergio mattarella so he has protection from these two party leaders, doesn't he? >> he does he put strongly his position forward, he wants the deficit to be around 1.6% that's what was agreed with europe a few months ago by the preceding government i think that's a negotiating position with the two party leaders who want something more, maybe 2.5% and dimaio says 2.8% like france. i think they will compromise around 1.8, 2%, a level that is acceptable for the eu, maybe not as much as they wanted, but it's okay it is also borderline acceptable for the market the key point is what are the assumptions underlying those

projections. >> it's not as simple as that, right? the investor community is saying anything sub 2%, 1.9%, 1.8%, would be good, but above that would be bad it's not quite as simple as that there are assumptions especially on the growth side those will be key to determine the trajectory of that deficit and if they come out with a 1.5%, 1.6% growth forecast for next year, that's way higher than other analysts are expecting for italy. >> absolutely. we think that's the critical point and what the market will focus on the market says 0.8 to 1.2, so around 1% next year, considering that italy's growth is already slowing down this year quite significantly. if they come back with 1.5%, 1.6% growth next year, the market might be quite disappointed because they might not think those figures are

credible so whatever you put as a figure for the deficit may not be equally credible >> i did mayo warned last night his five-star party would not support a budget if it did not include universal basic income, a central plank of their party's existence for many years is that a realistic threat or another example of his tendency to exaggerate? >> i think it's the latter it's not a credible threat i don't think that i did mdimai draw the support of his government there's no credible alternative after that they're not ready to make a government with the five-star. salvini may break his parliamentary group and form a center-right government, so it's not a credible threat. it's making a point. >> who is the point for? five-star voters

is it for mr. tria for lawmakers? who is he making that point to >> a bit of everyone including himself. he needs to reinforce his position in the party. he hada good showing of salvin the last few monthshow much popularity he has gained so he needs to talk tough and show that he's still on the short list part of it. >> on that topic specifically and talking about salvini's surging popularity, they're ahead of five-star, which is a big jump from where they were polling going into the elections. do you think at some point next year he may look to capitalize on that and call for another election and dismantle this coalition? >> yes, that's the clear risk. for this year we are kind of safe mattarella will never dissolve parliament during budget season. we go effectively until

december, we escape with this coalition. come january anything can happen if salvini wants to capitalize on popularity, he might pull the plug with this government, go to elections in march, then go to the european elections with the win demibehind him and then show that europe can be changed for good under this pressure >> we talked about the universal basic income, something five-star wants. we have not talked about pension reforms, but i also want to ask about this concept of a flat tax that's dear to the heart of men like salvini it's obviously going to be another thing that concerns investors when they look at deficit spending town the road if that doesn't get included in the latest budget, it doesn't seem like it will be in the form they talk about in the election, do you end up with league iga vs

upset? >> if you look at peoples concerns, there's been a recent poll, number one is pension reform, then migration, then a little bit lower in the scale is the flat tax, potentially the universal basic income so salvini needs to deliver on that, which is also a longlasting claim that he made for a number of years that he will reform the pensions introduced by monte. and i think they will introduce some form of what they call the number of years of contribution must be equal to 100 with limitations. that will be one thing flat tax, there may be an initial introduction which is an extension of the flat tax which

already exists in the fiscal system which is for smaller companies, you pay 15% if your revenues are below 65,000 euros. they might extend this to 100,000, 150,000, and claim they started introducing the flat tax in the system. >> we have to leave it there >> thank you >> if you want to learn more about the italian budget, head to cnbc.com for a very full guide. i just want to bring you comments from the iranian oil minister this is in direct retaliation to the comments president trump made yesterday at the u.n. general assembly accusing opec of extortion via higher oil prices we have now heard from the iranians, they say that if trump wants the oil prices not to go up he should stop interfering in the middle east. those are the comments out of the iranian oil minister

we have seen a big spike in oil prices over the last couple of months or so we have brent trading through 0 dollars now. the highest level it's been in four years google will admit it made mistakes related to privacy when company executive appear before a u.s. senate committee today. the firm's newly announced chief privacy offer will say that google has enhanced its efforts to protect privacy but he is not likely to discuss prior mistakes in detail. comcast has now purchased 36.95% of sky. the u.s. cable giant said they will continue to buy up the stock at 17.28 pounds per share. among the sellers is elliott capital advisers which reduced its stake in the british broadcaster. the hedge fund previously held a

4.3% position. julianna joins us with more. >> this represents significant progress for comcast in terms of their push to reach that key 50% mark just to put this into context, comcast has until october 11th to secure 50% of the deal. so approaching 37% puts them in good stead to get there. in terms of who has been selling to comcast, regulatory filings from elliott advisers, a variety of other hedge funds who have been involved in the deal. certainly a celebratory week for those guys one key outstanding issue is, of course, the fox stake. fox still retains 39% stake. we have not heard from them yet on what they plan to do with it. given comcast is making strides on their own, it doesn't seem at this point the deal closure is dependent on fox >> you and i have been talking to analysts.

i wonder from your chats with people in the market, some of the hedge funds who have been participating in this deal what do they see happening next with comcast? >> one interesting question entering the debate is whether this is the end for comcast in terms of their push to make acquisitions, search for growth. one of the views that we heard is that comcast now will focus on its core business focus on de-levering, given that this deal will lever them up to over three times contrasting view we heard yesterday from brian roberts, it's in his dna to do deals. nbc, where cnbc comes from, one of the acquisitions in the past. it is in their history >> one other topic that comes up a lot is how soon this will start to be accretive for comcast.

some of the views out there, the prevailing view is that they may have reached too much on the price offered ultimately to secure the deal. what are the prospects in terms of revenue generation now that this deal is almost finalized? >> on the synergy front comcast has officially targeted 5$500 million in annual synergies from the deal these businesses are complimentary, which is part of why comcast is doing this. that means it's a bit more difficult to eke out synergies from overlaps. what we understand from a revenue generation perspective is comcast is keen to dive into sky's technology portfolio and try to leverage what they can offer in that way. >> we'll be watching out for this story julianna, thanks for joining us. boohoo shares are surging after first half pretax profits at the retailer jumped 22% look at that share up 9% this morning. the firm saw strong revenue growth across all geographies.

they also raised their full-year revenue forecast and highlighted the strength of the balance sheet. and nike shares fell in after-hours trading as gross margins came in just below expectations they are forecasting similar growth in the second quarter it's the first set of results where it will see any impact from its controversial advertising campaign led by colin kaepernick. and manchester united shares took a hit after fourth quarter revenues fell 16%. broadcasting comps were also lower after they failed to make it to the quarter finals of the champion's league. if you have any comments or anything you want to tell us versus anything we've discussed on the show, follow us on twitter, @streetsignscnbc. coming up, we'll talk fed as

the central bank looks to hike rates for the third time this year later today people tell me all the time i have the craziest job, the riskiest job. the consequences underwater can escalate quickly. the next thing i know, she swam off with the camera. it's like, hey, thats mine!

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welcome back to the show u.s. treasury yields extended their climb as the fed enters day two of its september meeting. the central bank is widely expected to deliver its third rate increase of 2018 later today with analysts anticipating a quarter point hike steve liesman broke down the results of the fed survey. >> amid concerns over tariffs, inflation and rate hikes, wall street is looking this year and next for modest stock market gains and solid economic growth. the cnbc fed survey shows participants forecasting 3% growth this year, slowing to 2.8% in 2019 unemployment will keep ticking lower according to the 46 respondents. >> it seems to me the market has done a good job of saying we'll worry about these tariffs when there's evidence they're harming

the economy. and until then, let's focus on what we do know and the economy is strong, earnings are really strong >> the group forecasts we'll be above the 3,000 level. the ten-year treasury is forecast to rise to 3.5% from the current level of 3.1 as the fed pushes up its benchmark short-term interest rate there is another half point of hikes from fed through the end of 2018. with the tax cuts and deficit spending, most think the fed will have to raise rates high enough to slow the xli doeconomn and ward off inflation we have just about every inflation indicator pointing upwards. this will add fuel to that fire. >> despite concerns over tariffs, fed rate hikes and inflation, the survey shows a small chance of recession baked in by wall street over the next 12 months.

joining us is the global head of g10 fx research from standard charter steve, great to have you with us today. thanks for getting up so early it's a big central bank day. can i ask what you're expecting? we know the hike is pretty much priced in. are you expecting change in the dots for next year, perhaps some modification of their longer run neutral rates? >> yeah. we're expecting some of the dots may shift up that the median won't move off three. we may end up with a few more of the fed governor's sort of pointing to three. neutral rate, not sure they'll push up. the risk is that they push down the natural rate given some of powell's comments at jackson hole it's hard to tell which way the market would react if they pushed up to the neutral rate.

you know, it's an open question. i think from the fed's viewpoint, i don't think they have an incentive to rock the boat now i don't think they're looking to send a strong message. >> if they're not expected to send a strong message, there was also some talk they maybe looking to remove the word accommodative. given what you said, are you expecting them to keep the word accommodative? >> you know, it would not be a big surprise if they removed it now that they're pushing above 2% they're not that far from what they considered to be neutral right now. if they did remove it, i think the market would view it as being somewhat dovish, signaling that maybe they're close to what is neutral again, i'd say it's -- i wouldn't say largely priced in, but probably somewhere between 40 and 60% priced in now it wouldn't be a huge surprise

>> steve, many analysts who are coming on our show are telling us that we're getting into the late cycle part of the u.s. hiking cycle and u.s. economic cycle what do you think that means for the fed going into next year, especially given we're likely looking at somewhat of a slower growth profile for the u.s. in coming years time, still strong but not as strong as it was for this year. >> the question is how much it comes off. i think if what we've seen -- if the fed expects the growth to fall below potential, given back some strong growth we've seen recently, the market will see that as a dovish signal. anything that signals we're close to peak cycle will be viewed as dovish the dollar would be vulnerable to that. from what is priced into the market is an indefinite business cycle. doesn't mean people are

unrealistic, but they don't see anything that indicates the cycle -- any imbalances to suggest the cycle is doomed to come to an end soon. >> you mentioned dollar vulnerability just then. i wonder what in your mind as a statement would very significantly weaken the dollar? >> i think the biggest thing is if in the 2021 forecast if they suggested that the u.s. growth would slow below 2%. somewhat below what they view as potential growth that would mean what they're seeing is the rate hikes they're projecting would be enough to actually get the economy to grow below trend. from a markets viewpoint that end of cycle signal would be very devastating to the dollar at this stage. >> question on the change of

personnel. we also have a few people who have left, a new choice chair, do you think that will affect the overall composition or tone that comes out of this fomc? >> i don't think so. the people they added are mainstream, very well respected in the economics community i think there's a fair degree of intellectual continuity there. the issue for this fed is that if they see inflation picking up significantly, they know what they have to do. if they see it picking up moderately, they can wait a bit and allow the price level to catch up to some of the shortfall. i don't think they really believe the forecasts or projections literally. i think what they use is a way of conveying what the reaction function will be and what they see themselves as trying to

achieve. >> just very quickly, steve, we have about 20 seconds here, market dots next year pricing in much less than what the fed are telling you. they have about two hikes priced in for 2019 versus three from the fed. do you think that's about right? >> well, actually we think that's about wrong we have four hikes priced in, assuming that the economy keeps growing at a pretty strong pace and there's no big volatility in the market we don't see anything that's going to slow the u.s. economy down and from the fed viewpoint that means they keep hiking. >> we'll leave it there. thank you very much for joining us a quick look at u.s. futures. it is a big fed day. that is it for today's sw. ho th stelara®. ho for adults with moderately to severely active crohn's disease, stelara® works differently. studies showed relief and remission

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here are your top five at 5:00 the fed front and center again rates likely to rise but can the economy handle another hike. oil prices hiking. president trump saying opec is ripping off the world. delta air lines and passengers trying to get back to normal after they were slammed by an operations outage. president trump heading back to the u.n. today. he will chair a security council meeting. and they just did it nike reporting a big earnings beat but it's what the company said about colin kaepernick that is grabbing the headli