stay with us, the fed decides. ♪ tom: good afternoon, the fed decides. an extraordinary day.hank you kevin cirilli for his report a few moments ago from the white house that we continue with our fed coverage. markets have moved through the morning off economic data. rate dynamics with balance sheet dynamics -- let's focus on the rate market. jersey joins us. let's start with the steepness of the yield curve. the big issue i have, bring up the chart -- i don't have a marker but the idea -- bring it over here -- we are coming down from 130 basis to 85 down the red arc basis points and everyone says there is no recession, no worry. i have seen this three or at far times before -- i have seen this three or four times before. >> this morning's number was a bit of a game changer given the weakness of inflation. getting back to the lows we had in 2016 is likely. the way that will be driven is for the 10-year rate continuing to move lower and perhaps seeing 2% in the not-too-distant future on 10 year yields. scarlet: i extended the chart for longer. there is the curve flattening and

many fed watchers think the fed could pull back if the inflation mick da economic data remains soft isked janet yellen if she would stay on if asked by president trump. >> what i said about my own situation, i fully intend to serve out my term as chair, which ends in early february i have not had conversations with the president about future plans. i do very much hope -- i know they have been working hard to identify appropriate nominees for the open slots and i do very much hope that there will be nominations in the not too distant future >> back to the rate story. we have a bit of a disagreement between the markets and the fed. fed fund futures don't show the next rate hike priced in until march of 2018, but most think it happens before the end of this year the good news here, we have a one handle in front of the fed funds rate so it will be easier instead of the zero and being a fraction, that hasn't happened since 2008 >> wow amazing how long they stayed so low. >> with the zero in front. >> let's come back to this disagreement with what investors are pricing in and what seemed to

it is not just the fed.en changes of government and things have turned out to be stronger than expected six months ago. scarlet: has emerging markets gotten extended? >> not yet. we will watch when it does, if it does. thank you for joining us. >> my pleasure. coming up, we had to washington for the latest on today's issuing -- shooting. an update from washington. this is bloomberg. ♪ >> it is time now for first word news. the fbi has taken over the investigation into the shooting for an annual charity congressional baseball game. louisiana wasof among those wounded when a gunman opened fire at a baseball field in arlington, virginia this morning. flakea jennifer jeff describes seeing steve cohen least lying on the ground. >> when we heard the shooter was and, i ran low out to steve started putting pressure on the then we did that until the medics arrived. congressman scalise remains in critical condition. is identified as 66 are old james hodgkinson and were shot and killed by capitol police. congresswoman

the fed should not be targeting.f technology is helping the consumer and helping lower income, not present down on inflation. >> when you think about a fed that is going to have to be dealing with two important forces right now. first, you have the short-term inflation shocks and the fed is looking at the long-term inflation expectations. the second is how the fed is going to articulate the difference between what they have done on the balance sheet and the cyclical movement. there is a high bar of change for the unwinding of the balance sheet, but on the other hand come they still have the ability to hike or not hike or cut. how to articulate this is going to be the challenge of thing going forward. jonathan: your story at blackrock, breakevens are rolling over, the 10 year treasury yield is lower than when they started hiking back at the back end of 2016. i find those two things hard to reconcile, do you? >> to take today's movement in terms of the yield curve, and i don't know, but i have chart we may pull up on t

markets did react to the fed ike -- fed hike.amy inocencio has more. >> i want to show you what is been happening in terms of how we end this said day here. this is how it was. although it looks mixed, this was off session lows. dow jones industrial avenues at a new record, up only 0.2%. 21,374 is where we stood here. s&p 500, i want to show you how this turned out over the course of the day. you can see the s&p was flatlined most of the day up until 2:30, when the fed came out with its announcement. markets took a little slide. we did expect what was going to happen with the 25 basis point hike. we ended up near the flatlined. let's dive into the bloomberg back to the left side of the screen. i want to show you the function, the sector health of the s&p's 11 sectors. out, want to point financials up zero .2%, as well as information technology, down 0.5%. stocks have been much, much lower. over the course of the afternoon when janet yellen was speaking, and ended inlosses the green. technology was the reverse, higher in the day.

we're talking the fed, the ted, the fed, but they don't control it anymore is the yield curve tellinge economy and should stock investors be worried it's telling you you've had three months of weak inflation data for sure it's telling you that they are in play, lower stimulus >> the yield curve doing what it's doing put aside the fed. >> right, and we've been talking about the fed for the last several years and from our perspective having -- i think we're talking about the ramifications of the balance sheet but that can be used as a tool as well and we need to think about the fed being very flexible and being a little bit creative here as we go into the back half of the year particularly as we see this economic data softer we saw softening data and then a nice rebound into the fall i wouldn't necessarily chalk this up as the end of sort of the growth expectations for the rest of this year. we need to be cognizant of that as well. >> all of you are coming back. we have more to discuss. i'm interested if they ask janet yellen if they're looking for her replacement though she's not suppo

that moved very well in correlation with the fed's balance sheet so as the fed added on more assets all of that the team would put it because the fed buys a bond it puts cash out of the economy all that cash went into stocks so now what's going to happen if they start selling off all of the value of these ponds and we're talking billions for a trillion dollars in holdings. so what they're going to do as these bonds mature so the bottom assures and they get say it's a thought of worth a thousand dollars a year when that bond that sure is they're not going to take that thousand dollars and go back out and buy another. bond that's what they've been doing so when they don't win that thousand dollars comes into the fed and they don't go out and buy something that made the thousand dollars come out of the economy so you're reducing liquidity and at the same time they're also raising interest rates which in effect it also helps to reduce liquidity so you have to do things now getting better reducing liquidity and you're telling investors that we're going to start tightening all of this we're g

the fed said i'm going to do this. investors said sure sounds great i'm out of bonds and i'm into stocks so what we did was the new york if you look at the new york stock exchange composite which is a really good broadband measure of kind of all equities in the u.s. that moved very well in correlation with the fed's balance sheet so as the fed added on more assets all of that team would put it because the fed buys a bond it puts cash out of the economy all that cash went into stocks so now what's going to happen if they start selling off all of the value of these bonds and we're talking billions for a trillion dollars in holdings so what they're going to do as these bonds mature so the bottom assures and they get say it's a thought worth a thousand dollars a year when that bond it sure is they are not going to take that thousand dollars and go back out and buy another bond and that's what they've been doing so when they don't when that thousand dollars comes into the fed and they don't go out and buy something that mad

the fed is years ahead of them.s talking about reducing the size of the balance sheet, and the ecb is talking about reduci purchases. look at the data out of europe, spain, italy, greece moving ahead. italy has posted better numbers. europe is outgrowing the u.s. right now. kathleen: i completely agree. europe is going to become the focus. there is a lot of youthfulness coming out of europe, and we have inflation there too. jonathan: i want to wrap this up with the rapid fire round. one word answers from each of you. do we hit 2% on the 10 year before we hit 2.5%? bob: 2.5%. kathleen: 2%. michael: i wish it was 2%. jonathan: high yield or cash? bob: high-yield. kathleen: cash. michael: high-yield. jonathan: are you long euro or long sterling going into next week? bob: sterling. kathleen: euro. jonathan: mike? michael: i will take the other side and go with the sterling. jonathan: it has been great to have you with us on the program. kathleen gaffney, michael collins, and bob michele. that does it from new york. we w

i think the fed's almost done raising rates. there's maybe one more rate hike left >> you think they're done? >> well, they're not done. they're done with one phase. and that is rate hikes then they're going to pivot to reducing the balance sheet the reduction of the balance sheet is another version of raising rates. the fed's already told us if they reduce by $500 billion, that's the equivalent of two rate hikes maybe they're going to start reducing the balance sheet that's going to have the same effect 37 they're going to go very slow. it's going to go about one raut hike a year. it's going to be the equivalent of another rate hike you're not going to get a whole lot of aggressiveness out of this >> saying if you sort of go out from what they said they're going to do in terms of shrinking the portfolio, it means that you've got $325 billion of tapering next year which is equivalent to a quarter point rate hike. let's bring in steve leisman we haven't even talked, you know, this about the personnel changes. i also think that i'

if the two-year reprice is based on what the fed is doing, is the market determining the fed is goingo quickly too soon and taking away inflation and growth from the future, and therefore the back end is well supported because of that not because of the ecb? is there an argument there? >> somewhat. there i think there is this debate going on about is the equity market right, the rates market right? both markets are right. there is extraordinary demand for income in the world. like not think anybody in this generation has seen before. what ends up happening, that pull for i have to get yield, it doesn't go away. people talk about there must be a pernicious view of what growth would be. you think a decade ago with oil gyrating extraordinarily, from $40 to $150 in back. we are going from $40 to $55 now. more stability of inflation than we have had historically. you can be comfortable holding interest rate for much longer. arethan: gents, you sticking with us to the next 20 minutes aired coming up on this program, over the next 10 minutes, a little nervousness in the market. all of these

the fed's job a little more difficult. but keep this in mind. cheap oil has been a huge factor in the inflation and retail sales equation. but lower oil is good for the consumer. so we shouldn't be rooting for higher oil just to satisfy some inflation targets the federal reserve has. for "nightly business report," i'm bob pisani at the new york stock exchange. >>> christina hooper is here with us now for more on the fed, the economy, and the stock market. she's the global strategist at invesco. welcome, christina, good to see you. >> great to see you. >> we'll start with the fed and work our way through the economy. this is pretty much, as i recall, what you were forecasting, correct? >> that's correct. we expected a rate hike. we also expected that we would get more information on balance sheet normalization, which is really the 800-pound gorilla. >> that's what the fed has on its balance sheet that it's trying to put back into the market, right? >> sure. we saw this historic increase in the fed's balance sheet through wh

today was speeches from k-fed fedidents and fed -- key presidents. potentially, market moving events. we are seeing a lot of movement that not a lot of direction. joining us is a chief investment officer. minutes got the fed last time around and now we're getting more fed speak today, does it change which direction yields may be headed? >> it is interesting. i think the perception of the fed minutes being slightly hawkish took the markets by surprise but investors were not surprised and did not move the market at all as you look at interest rates. what we are hearing from several fed governors is maybe a wait and see approach, focusing on whether inflation will increase toward the fed's desired rate over a reasonable timeframe and that has been the missing ingredient. we have seen inflation decrease over the last several months, so i think the jury is a bit about on whether the fed will continue on their track of several more rate increases. the preponderance of investors, what is more important when they are deciding this or trying to figure out wha

the fed delivered. they did exactly what investors thought they were going to do but again i think there is a conundrum here as jay points out, they may want to raise rates but can they? >> that is a great question. economic reports they know oh so welcoming are tepid, going back to early 2016. retail sales today. inflation report. we know that they're watching inflation so closely. we are seeing markets right now at 21,354. so you now just at this moment, we're at all-time record highs. so the market sold off, digest ited moved right back here to the record highs. he keep a close eye on the 10-year bond. this is at the lowest level since late last year. 2.11%. really unbelievable when you look at that 10-year bond. commodities are just fine. trish: i hear you. it is a strange environment we're living. i spoke to bill gross about this yesterday. he is concerned about the structural problems going on in our economy. kevin kelly, we now live in an environment where it is getting increasingly heart for the

in fact, growth right now is lower than the last time the fed cut rates. so if you think about the, the federally because as steve said is the market is giving them this avenue, it almost feels they have to do it they're jamming it down at a time that i'm not sure this makes sense. >> absolutely. there is no question about it. you have the financials resilient. there is no doubt they're resilient t. downside risk is muted right now. i think it's the best place you can put your money period in this entire market given the moves and everything else financials are telling you a couple things, your rates are not going much lower or we're not really focused on the yield. we're focused on returning cash to investors we're focused on the opportunity for what is coming out of deregulation. >> you know yields are not going down, yields they continue to go down every day. few look at the stockmarket as a barometer of future economic growth in the u.s., you are looking at the wrong thing, you mentioned the yield curves, the 210s you look at commodity, crude, it's rou

now we have the fed statement, the fed plan to start unwinding the balance sheet and continue with the interest rate hike, two of which are already done, is that more so? >> the u.s. economy is rolling over. our sincere hope is that that doesn't happen. , the fed isat telling you their data dependent. but when you have inflation rolling over and then seek to unwind the balance sheet at the same time without any recognition of the fact they are not looking so hot, if that is not data dependent -- tom: what is the question you want to ask janet yellen at the conference in six minutes? is, whyuestion to ask do you continue to hike rates in such a low inflation environment? there is no risk to keeping them low. tom: and your question? there was a lot of talk. >> to move down in inflation is temporary. i would ask what is the reasons why you think inflation moving down is temporary. why should it not just be down? scarlet: transitory, is that still the way for inflation? tom: what do you want to know? >> what would it take for you to get off the path of tightening? what do i have to show yo

>>> good morning it's fed decision day. stocks trade at record highs investors await the central bank's latest policy decision. >> uber fallout. details straight ahead. >>> and the chairman of one of china's largest insurers was reportedly detained. we'll head to beijing for that story. it's wednesday, june 14, 2017. "worldwide exchange" begins right now. ♪ >>> good morning a warm welcome to "worldwide exchange" on cnbc. i'm wilfred frost. >> good morning. i'm seema mody in for sara eisen. >> great to have you with us with us forever the rest of the week >> good to be here i'm here thursday. >> i'm off friday, which is nice indeed straight to the global market picture. futures pointing higher. a decent day on wall street. about a half percent of gains for the s&p and dow. the nasdaq led the charge higher by 0.4%. an important rebound for the tech sector after two sharp days of selling during those two days, the other sectors did not follow suit to the down side and the down side for tech only a two-day occurrence the nasdaq

this is a nuanced fed decision today. the fed decides, one :00 p.m. be there without mohamed el-erian. ♪ reporter: this is "bloomberg surveillance." it was a rocky day for uber. the company was in the spotlight for its workplace culture. david bonde has resigned from the board, apologizing for his remark during the meeting intended to address gender bias. later, travis kalanick said he would take a leave of absence. and one of china's fastest-growing insurance companies says the chairman is unable to perform his personal duties. a local magazine have reported that wu was taken away for questioning by chinese authorities. that article has been a movement from the magazine's website. francine: thank you, taylor. the federal reserve is widely expected to raise rates later today, despite softer inflation. bloomberg macro strategist mark cudmore said the fomc had little choice but to hike, but he warns investors can come back to regret that lack of possibility. meanwhile, bloomberg has been told that the central bank needs to be clearer about how it factor

jonathan: is there a message for the fed?ichael: at the beginning of the year after the trump trade, the markets were pricing in a funds rate of 2.75. today the markets are pricing in about 1.75, that is probably much closer to what is likely to be realized and closer to fair value. i think you're supposed to fade this rally a little bit because a lot of those lower rate hike expectations are being priced into the market. kathleen: i think the challenge for the markets is if you look at the short-term data, it says we should take a pause. when you look at what rates are pricing in over the next two years, it is only two and a half hikes, which is not enough for the economy. it is tough to be a bond bear. the risk with rates so low is there's a lot of downside left on the table. bob: don't listen to me. listen to -- who laid out a clear and precise passport fed tightening. when i look at maker initial conditionshows, it st the fed has raised rates three times, and financial conditions have he's quite a bit. this suggests they

we are going to look ahead at the fed meeting with the former philadelphia fed president.ng you a special report on the fed decision. live from new york, this is bloomberg. ♪ david: the world change last november with the election of donald trump. data it changes much as we thought it did? there has been more doubt about how much washington can really get done. joining now is the chief economist. a softball for you, steve. you were not quite there. at this point, is this relevant at all to the markets? steve: people have discounted a lot of the potential donald trump has on 2017. have they given up completely on 2018? that's an election year and makes it more problematic for them in terms of the amount of legislation they will try to get done it. taken out 2017ve and in the process of taking 2018 out. david: parts of the market are still in play. we just got a report about some backing off of dodd-frank. it's not as radical as some thought. could that help the financials? steve: it could. the problem you have is they are not really changing the -- legislation. they are cha

let's go to a quote from the fed.irms continue to improve their capital plan practices. -- fed noted this concludes the capital one stumble was a surprise. they said their internal control functions, did not identify material weakness. the fed could not provide reliable assessment. they did approve a share repurchase, $.40 a share. it appears they will be able to get back in line. twos almost as if a page or was missing from their homework. they go back to the drawing board. the key takeaway, the banks technically passed. after the 2008 financial crisis, it was a struggle for many banks. the procedures have to become more streamlined, or they are in line with the process they go through. yvonne: less stress for the stress test now. let's get first word news with courtney collins. prepared toe e.u. make a major concession to the u.k. over brexit. conceding ground on the assertion the european court of justice must be the final arbiter on the rights of e.u. citizens living in britain. the issue will be at the agenda in

price index, and day one of the fed meeting.n wednesday, look for retail sales, cpi, the fed statement and the latest economic proje projections and janet yellen's news conference. thursday, impors prices, philly fed survey, and friday housing starts >>> to ongoing tensions in the middle east. it's been a week since several arab states cut ties with qatar, accusing the country of funneling money to terrorist groups how are those sanctions impacting the region's economy hadley gamble sat down one-on-one with qatar's finance minister to find out hi, hadley >> the finance minister in qatar saying it's business as usual, despite pressure on the currency let's listen in. >> if you look at what's happened, sometimes a lot of people think we're the only one to lose in this. i don't think so qatar is a very strong economy it's a big economy i think if we're going to lose a dollar, they will lose a dollar also i think there's a lot of business among everybody around us so i think it's -- i like to have a win-win situation, this incident,

important leave for the fed, what matters is the real fed funds rate is actually still negative belowhe rate of inflation. the policy is quite accommodative. more hikes will come. they need more ammunition of rate hikes to deal with the future downturn in the economy. mark: wage inflation is certainly slowing. the weakest pace in more than two years. slowed more than 2% in the first quarter. does the bank of england -- bank of and with have a's stagnation on its hand? >> more of a problem earlier when the pound is selling off. there does not seem to be any end to it. view, at point of contributor to inflation and by application, one of the drivers behind the erosion and it may be playing an essential role. it is still the case the bank may worry if indeed political uncertainty lingers, the data now starts to deteriorate p or we may see a slow in the currency. as to whether they act preemptively tomorrow night, i doubt it. totral banks are not meant predict market reaction. they are meant to put out fires. i guess we will see the pound first before the bank of england response. what ab

bloomberg also spoke earlier to randy, the former fed government -- the former fed governor. the goal how much they want to shrink, that is going to help to from their point of view stabilize things. yellen one hour, lots of journalists, i'm sure there will be a lot of people trying to clarify if there is a june hike if it is leading to september. if you're going to start reducing the balance sheet, does that substitute in some sense for rate hikes. complicated in this stage of monetary policy. it is uncharted waters. a brave new monetary policy world. in march you were at that press conference with janet yellen. she stopped a bit, she was hesitant when it came to her answer when it came to the prospects of inflation. what are you looking out for in this? more on yellen may be that side of the argument now i'm more worried about week inflation. a couple of things, there were two or three fed officials who only sold to -- to rate hikes this year. what if you get more dot plots that have pulled back from three? that could be interesting to see . the fed will be updating its eco

the new york fed has a survey of inflation expectations.hat number tumbled one as people where inflation will be three years out. in april, the average was 2.91%. now in may, it is down to 2.47%. expectations, are they following weakening inflation or leading it? let's take a look at the bloomberg chart. the feds target is 2%, the yellow horizontal line. 2% briefly, but now it's heading lower. see theeresting to inflation expectation decline. having said that, a bloomberg survey conducted from june 5 to june 8 found the following prediction from economists on average. two more hikes this year. they are in line with the fed one hike this week. , and the next one coming in september. the balance sheet unwinding starting early in september. in the upper left-hand corner, the odds are up to nearly 98%. two thirds of the way across, you get to the second column. from the right-hand side, though down to september hikes. traders are not on board with more than one hike. some say one in june and that is it. a fed governor spoke in new york, saying

if the two-year reprice is based on what the fed is doing, is the market determining the fed is goingo quickly too soon and taking away inflation and growth from the future, and therefore the backend is less supportive because of that not because of the ecb? is there an argument there? somewhat there i think there is this debate going on about is the equity market right, the rates market right? both markets are right. there is extraordinary demand for income in the world. like not think anybody in this generation has seen before. where do i get healed? -- yield? that pull does not go away. the stability of inflation will be much better than it ever was. oilthink a decade ago with gyrating extraordinarily, from $40 to $150 in back. we are going from $40 to $55 now. much more stability. you can be comfortable holding for much longer. jonathan: you're sticking with us for the next 20 minutes. 's rick reader, jeffrey rosenberg, and apollo gold and berg. weighing in with some forecasts for more volatility. from new york, this is "bloomberg real yield." ♪ ♪ jonathan: this is "bloomberg real

jonathan: is this a message to the fed?uest: the beginning of the year with the trump trade, markets were placing of funds rate for about two and three quarters. that's something we look at. long-term investors today come up with this rally, markets are pricing at one and three quarters funds rate. that's much closer to what's probably to be realized, closer to fair value. bowl, i think you are supposed to fate this rally a little bit because a lot of those lower rate hike expectations are being priced into the market. jonathan: kathleen, the want to weigh in? guest: the challenge is, we need to take a pause here, but when what rates are pricing in at over the next two years, it's only two and a half hikes. that's not enough for the strength of the economy. with bob, it's tough to be a bond bear, but the risk is, with rates low, there is a lot of downside being left on the table. guest: don't listen to me, listen to lowell brainard in her address on tuesday, laid out up for size path for tightening. when i look at bloomberg

has been backing off before the fed meeting. looking like it's trying to hold above the 1,250 level >> that firmer dollar seems to be sending gold lower. >> bob iger is in china today as the company celebrates the one-year anniversary of shanghai disneyland eunice yoon just caught up with bob iger, she joins us with more good morning >> good morning, sara. as you said, this is the first-year anniversary for shanghai disneyland. disney is semcelebrating it in a big way. bob iger is in town and i spoke to him about the visitor numbers. this is what he had to say >> i'm pleased to say, as we hit here on the one-year anniversary, we exceeded 11 million in guests. we had mentioned 10 million by the 11th month we now exceeded 11 million we made no projections about what's ahead except to say that this is something that's been embraced by the people of china truly in that about 50% of those visiting are actually from outside the shanghai region. that's a lot higher than we expected >> now, part of the point of this business was not onl

the fed has been quite active. we have seen a four rate hikes over the course of the last year or so, and that is causing the curve to flatten a bit. and the longer end of the curve is being -- down by the fact that ultimately we have not seen much in terms of inflation. that is getting investors an avenue to stay invested. jonathan: kathy, typically we talk about the yield curve flattening and maybe at some point down the road, inverting. is it different in 2017? kathy: i don't think the fed is going to go so far that they will push it to inversion anytime soon, but i do think that the market might be underestimating how much the fed is actually going to move ahead, and the possibility that the fed actually might be right and inflation picks up down the road. jonathan: michael, this flat yield curve story that so many people reference, some people say forget about it. given the central bank stimulus elsewhere, this is not your 2007-2006 story. what do you think, mike? mike: i think a little bit of it is simply rel

the fed stuck to its guns.te hike this calendar year and three additional rate hikes in 2018. i think that is at all to with what is priced into the front end of the bond market. whether you look at fed funds futures or two year treasury yields. i think we have a disconnect still between the market and the fed. i think that was the most interesting development. matt: why is the fed so willing to put its neck out like that when the inflation numbers, core inflation numbers, are coming in so weak, and none of the trump agenda seems to have gotten really even a start yet in congress. jeffrey: well, i think the economy can do fine without any trump agenda moving forward. you saw the fed so looking for 2%, 2.1% growth. that is decent enough growth. i think the reason why they are confident to move forward without inflation pushing up here is the employment rate. we are at 4.3% on the unemployment rate. it,nding on how you measure somewhere around 4.5 percent to 5%. we are below that. to quote janet yellen, the condi

minneapolis fed president.half hour later. manus: if you are bloomberg customer you can watch the show on tv on your mobile and desktop. question.k the guest there is a show producer there ready to help. anna: leaving out greece, the ecb is unlikely to include greek bonds in its next round of qe. we will discuss what is next for the cash strapped country. manus: and we continue to monitor this fire that has engulfed an entire block in west london. these are pictures from a little earlier today. eyewitnesses are claiming people are trapped in homes. it's near notting hill in the western -- in the west of london. authorities were alerted to the blaze at around 1:15 a.m. london time. this is bloomberg. ♪ anna: welcome back, this is "bloomberg daybreak: europe." you're looking at pictures from earlier on stay of a tower block engulfed in smoke and flames in west london. eyewitnesses claiming people are trapped in their homes. 200 firefighters and 45 engines have been tackling this blaze. these are now live pic

what will happen with the fed?ttle change their forecast with the exception of the inflation forecast coming down a little bit but still ending 2019 at their 2% target. janet yellen will get grilled on inflation because that is the fly in the ointment, the near-term weakness. do you believe it's transitory? all so the balance sheet -- are they still thinking this year versus later this year with makes people think it will be the september meeting and said that of december. things these are the questionnaires the michael mckee in the room will concentrate on. off of threeng major meetings and row where they hiked rates, they will take a pause in september to give the balance sheet is due course, put that on gradual autopilot in the background and then go back to hiking in december and follow it up next year as they keep hiking in every major meeting. david: when the fed did not raise a couple of years ago, is there a danger of missing a chance again? >> when i talk with clients and market participants, they are that

this say fed week.rwise there's not a lot of news and you didn't get any preannouncements that said you know what? we do have to sell tech. we didn't get them the downgrades aren't enough they're just not enough. >> heading into the last few weeks of the quarter we'll be watching for them. >> if you really want to sell these tech stocks with what you said about the nasdaq, do you want to look like that all you really owned were gap stores and you made a big bet and macy's? no >> good point. >> ibm was one of the few tech stocks up. wangs say ibm isn't tech but i believe it is putting a bottom, kind of gutsy. >> goldman is leading the charge on the dow up 55 been good morning bob pisani >> happy tuesday everybody good day in europe and in china shenzhen up 1% the day before the fed meeting we get the fed drift, the pendcy of the markets to move up in the day, day and a half before the fed meeting and yesterday around 3:30 we sort of moved up no real news up there, move up about four points overall, movin

if you ask me why, well, listen to the fed.nemployment is low, 4.4%, a 10 inflation has slumped, well, that is probably just transitory. who is onent foster board with rate hikes and removing stimulus put in place following the financial crisis things fed communications is problematic right now. the market doesn't believe the fed when it says what it is going to do. they need to communicate lette . believenot the markets the economy is different than the fed believes. it is because the markets have come to believe that fed will do this, but look how they behaved spread ort, so that diversions between market expectations and what the fed seems to want to be saying it is partly a creature of the fed's challenges at communication and its desire to be highly discretionary. failure of the fed to fully spell out its balance sheet strategy, he says it has created a conundrum. how would this mixed together? you are hiking rates, but not doing anything on the balance sheet, so how does that affect of the path of policy? bloomberg, and e

i think the fed is doing its job .the financial crisis, we are a different world. unlike europe, where you have banks that pass the stress test and fail a couple days later. julia: we will see where it takes us. arnold, thank you. and pravit chintawongvanich, thank you very much. joe: coming up, what you need to know for tomorrow's trading day. this is bloomberg. ♪ scarlet: don't miss this, president trump posting south korea's president moon jae-in for the first time. joe: and i will be watching data in the u.s. economy, we turn to releases of u.s. first quarter gdp and unemployment benefits. those are out tomorrow. julia: rite aid releases earnings tomorrow. if you have not heard, spent july 4 with bloomberg television. p.m., we will00 host the boston pops fireworks spectacular. i will be watching that. scarlet: that does it alisa: i'm alisa parenti from washington, and you are watching "bloomberg technology." president trump is urging congress to get moving on immigration reform. the house votes tomorrow on the so-c

the ecb, boj, and the fed remain dovish. to take their foot off of the gas slowly, but it is tough. there will be a series of mini tantrums given how low the rates are. guy: this is the u.s. real yield spread over six years. the dollar index is the white line. a big yield advantage. you have the dollar index here. they usually move in lockstep. they are not. they're breaking apart. is the move against the dollar heavy-handed? huw: it feels there should be support given the differential in yield. they should be taking their foot off of the gas. that is why the currencies are saying appreciation. i think that correlation is something will watch closely. tom: where is gdp growth? europe hasuggest reached an escape velocity of solid economic growth or is it uro-scolosis? huw: it is above escape velocity to trigger the ecb to rethink the right policy. the challenge is the north-south divide. growth in germany is running hot. confidence hadc a boost since macron. challenging was work to do. it is too early to declare victory. i am

that the line shows fed funds rate, the expected fed funds rate over the next year minus the core ctie had a dramatic tightening. we are barreling towards neutral for the first half of the year. part of that is the fed raising rates. the other part is the inflation data has been coming down. we want to see, does the inflation data keep rolling over and boosting the white line further? later in the day, what is the fed signal for the rest of the year that has the potential to boost the white line further and bring the fed pretty much to neutral, which would imply not much tightening going forward. vonnie: if the inflation data lightens up tomorrow, that is not good for the economy, right? >> it is not great. this is the tension. do they keep tightening even if the inflation data continues to weaken? that is what we will find out. is my: taking on matt base colleague mark barton. mark: speaking of on-the-fly decision-makers, down 20,000. down 21,000. so boring. istanbul, 100,000. the turkish benchmark today crossing 100,000. .00,000 for the first time ever in the pie graph we have stron

one hand in the fed on the other.gree incally 2017, but the market is not fine with the fed is selling in 2018. what is going on? >> the proof is in the pudding and data for inflation is not there yet. other economic data we have seen for the month of may have been disappointing, so those things are really what is behind this next set of expectations. while the fed is saying they will raise rates further, forthing it has been saying a long time, it has been slow to do so and the numbers on forecast that been lower. last week, the fed members own forecast, the mean of the expectations for 2017, 2018 and 2019 come all three were that were, so the meeting expectations they have for the fed funds rate for the and were all lower. -- for the end worked all lower and it is hard to be hawkish at this point given the fact other central banks are likely to be tightening their monetary policy, as well, and the fact that fed has a cautiously optimistic view on where they're going to push rates. david: doesn't depend on part with

. >>> great fed expectations. the central bank is widely expected to raise interest rates again tomorrow. so why aren't savers benefiting? those stories and more tonight on "nightly business report" for tuesday, june 13th. >>> good evening, everybody, and welcome. i'm sue herera. tyler mathisen is off tonight. is. >>> it is the 19th record close for the dow this year and the 23rd for the s&p 500. a recovery in tech stocks from their worst drop of the year helped propel the broader market l today. investor attention turned to washington. above the the testimony from atto jeff sessions and the federal reserve's two-day policy meeting. more on those stories in just a moment. first, a look at the numbers. the dow jones industrial average rose 92 points to 21,328. the nasdaq advanced 44. the s&p 500 was up nearly 11. and with stocks at or near new highs, a new survey shows a record number of investors say stocks are overvalued. bob pisani h >> reporter: the markets are back in record territory after snapping a two-day

the fed shrugged off worries about using inflation.y say they are sticking to their path of normalizing interest rates. we asked john gorman if the fed provided any significant surprises. as you just mentioned, i think the further along -- markets where for a hike in september and it was. they give so much information before the june meeting, it looks like the mortgage rates could stall then and cause behind then and resume the heights in december. -- hikes in december. >> it was an to your but the balance sheet. how much clarity did you get on the balance sheet on one and the active rate hikes coordination that they will carry out for the rest of the year and next year? that the coronation between the two is largely unchanged. as we stated, they are moving the tapering from september to december. based on the fact that they give so much more information in the june meeting than they expected, it is obvious that they will be doing it a little sooner. the question becomes how will they do it? they lied out how much they will buy over a

cleared the first round of the fed stress tests.organ stanley trails the streets on a key measure of leverage. bill of health. the republican plans to replace obamacare hit early resistance. ♪ anna: a warm welcome to "bloomberg daybreak: europe." we start the program by looking at brexit, one year on. we mark the one-year anniversary since the brexit about. let's have a look at the bloomberg brexit parameter. this is based on proprietary indexes that have been made by bloomberg and u.k. inflation. economic activity and that inflation adding up, which has been deteriorating in the most recent months. the start of this brexit process. uncertainty weighed on this index. data was clear up the start of the one you're period, helping some of that data to bounce back. that trade-off between growth .nd inflation growth trend we will talk more about that in a moment. we had 3 million e.u. residents having in the u.k.. that was news out of brussels overnight. that does support the pound a little bit. 1.27 on the pound. here is the risk radar.

rishaad: the fed is done and dusted at least for now. the pboc boosted borrowing costs after the fed raised rates in march, but this time there is a lot of skepticism it will do the same thing. scott, it is a different world to what we had, so does the pboc need to do anything here? >> we will probably find out in 10 minutes. there are arguments both ways. the argument that they will not follow is that the seven-day repo rates in the markets are higher than march, so this targeted squeeze -- rishaad: we have a chart with regards to that. >> we do. the stronger yuan and seven-day repo levels will show you what happened since march. those rates were much lower and the yuan was weaker. both those situations are now reversed, so there is less of an imperative to stop the outflows and bolster the yuan and squeeze on the repos. you have the hand on the capital controls as well, the fixing of the yuan strongest since november, so they don't want the yuan weakening again in this fed tightening cycle. rishaad: why do interest rates differentials

on thehe fed only reacts objectives of inflation. as long as the economy cooperates with steady slightly above trend growth with inflation rising towards the objective and unemployment close to full employment, they will look for opportunities to raise the target funds rate and proceed with the balance sheets. the two biggest challenges over the next three or four years will be: the recovery is long in the tooth. the probabilities are when the unemployment rate is this low we could be looking at a recessionary episode. the second uncertain date is what are the administration's fiscal policies? cuts, regulatory reform, health care reform? how will that affect the outlook for unemployment and inflation and effect their approach to setting monetary policy. vonnie: can i get a tenure forecast for the end of the year? joel: 263. higher.53 basis points the senior managing director at macro economic advisers, thank you. don't forget special coverage of the fed decision at 1:00 p.m. in new york, 6:00 p.m. london time. let's check in on the f