richard clarida: glad to be here.irman powell's speech. i want to go to a quote from the president george herbert walker bush. this sums up trade. " we do not want an america that is close to trade. identify the to risk of a zero-sum tone. if we diminish trade, what is the price? richard clarida: in terms of the outlook for the u.s. economy, trade is an important part. i do not think we are going there. trade is an important part of the global economy. the u.s. economy is in good shape and we can talk about scenarios but the outline is solid. is thethin the trade idea of exports and imports within america. how does fed policy linking to these political debates or do you feel it will be more removed to monetary policy? richard clarida: i'm not going to get into politics. to policy is important making sure the u.s. economy achieves maximum employment and that is the mandate given to the fed by the congress. we are focusing on what we need to do to achieve that. tom: chairman powell focused on financial stability. should

clarida: i'm not going to get into the politics.ortant to make sure they achieve maximum employment a mandates really given by congress. we are focusing on what we need to do to achieve that mandate. powell talked about financial stability. should that be a mandate? thinkarida: the way i about stability, it is important. if we achieve price stability and full employment, that will contribute to financial stability. that is the appropriate balance. >> we need a regime that looks at the combination of economic growth and price change. mr. clarida: the fed has a the fed has a framework. it is serving the fed well. a lot has changed since 2012. one thing as john williams emphasized, we are in the low r star. that means in a future downturn, there is less room for conventional monetary policy. central banks need to be worried about keeping inflation at target. the current framework serves us well. the federalext year reserve system, including the banks, will be doing an assessment and review of our framework, seeking input from experts t

the vice chair richard clarida speaks his mind on policy. >> central banks need to be just as worried about inflation target as opposed to going on target. >> tension between the united states and china have affected all emerging markets. >> this is a new type of war, the hybrid war. abigail: the world mourns the loss of former u.s. president george h.w. bush. >> he believed in civility with everyone. he worked across the aisle to get things done. abigail: it is all straight ahead on "bloomberg best." ♪ abigail: hello and welcome. i'm abigail doolittle. this is "bloomberg best," your weekly review of the most important business news, analysis, and interviews from bloomberg television around the world. let's start with a day by day look at the top headlines. the week began on a note of optimism for investors amid reports from the g20 summit that the world's two largest economies had called a truce in their trade war. >> the u.s. and china have agreed to put their trade war on hold, at least into the new year. >> presidents trump and xi reaching this temporary truce after a highly antic

vonnie: richard clarida on bloomberg this morning.his is bloomberg. ♪ vonnie: qualcomm has ruled out any chance it would return to its bid for semiconductors. this is after china opened the door following the g20 talks to looking at qualcomm and xp again. qualcomm revisit the $44 billion deal? >> i think this ship has sailed. qualcomm has commenced a buyback program using cash that had been earmarked for the deal. the dynamics of the semiconductor industry have changed. when qualcomm made the bid two years ago, the semiconductor cycle was on the upswing. now you are not seeing that. there are a lot of concerns about slowing growth across the spectrum of semiconductor components. to make this kind of big bet right now does not add up for qualcomm. vonnie: is there another company that might take up the idea that it might be up for sale or merger? >> that is the question. intel would probably be the one people would look at as a potential buyer of nxp. they have other challenges. they still don't have a permanent c.e.o. at this point. w

but fed watchers were able to get exclusive insight from vice chair richard clarida who joined tom keeneonversation on "bloomberg surveillance." tom asked how policymakers are factoring trade tensions into their economic projections. tom: if we diminish trade, what is the price? >> in terms of the outlook for the u.s. economy, trade is an important part. i don't think we are going there. trade is a very important part of the global economy right now. i think the u.s. economy is in good shape and we can talk about risky scenarios, but i think it is very solid. tom: within the trade is the idea of exports and imports of america, how does fed policy link into these debates or do you feel it will be more removed in the future, more sterile to monetary policy? >> i'm not going to get into the politics. i think fed policy is important in terms of making sure u.s. economy achieves maximum employment and stable inflation and that is really a dual mandate given to the fed by congress. we are focusing on what we need to do with our tools to achieve that mandate. tom: chairman powell focused in his

rich clarida and john williams have a better idea of how to do it.hy the chairman struggling to connect with this market? scott: i think they are going back to their comfort zone of understanding models and trying to figure out what is the neutral rate, and it will be really challenging for them. i think you got a little bit of it today with williams throwing a bone at the balance sheet. that is potentially in play, but i think there is no consensus and that is hard for the chair to deliver a strong message. jonathan: the premise of this conversation is assuming that they need to settle the market down. do they? brian: i do not think the fed is nearly as concerned about the markets as the market think they ought to be. i think that is exactly right. i think the fed is going to look at the data and it is slow to come in and relatively slow to change and there is a risk the fed is behind the curve in the markets are looking forward. i think that is a big risk given that the fed is focused on the data here. jonathan: what do you think the biggest issue

fed.ext story that is the rich clarida talking about how good the economy is. gina as market participant, do you look at devilish or hawkish fed? that over the last from a hawkish fed to a less hawkish fed. we'll see where we go over the several weeks. if you look at how the markets futures, we've taken out full hike over the last couple of weeks. startingt is clearly to adjust their expectations. for a fed that likely continues rates, ornterest perhaps at a less consistent less rapid pace than we've the last year.r it's still hawkish. policy.ill tightening it's perhaps less tight than we were anticipating. what, irony, no matter we're still underpricing hikes for next year. back,f the fed dials we're still pricing one. is that like a risk of that here to be had? >> sure. friday we have the jobs report. 300,000pens if you get jobs? that was september. obviously the economy has since the last that came out. an easyhas moved from to explain we're going to be raising rates because we're at zero posture to now we're getting close to where neutral is. know exactly w

we be talking to the fed vice chairman richard clarida. economic at the outlook on thursday. with us is the chief asian economist from -- you mentioned the dovish tilt from jay powell. why is the fed jawboning to the other side? >> if you look at inflation data , it has been more denied from the earlier inflation scares we have had. oil prices have come off sharply . economic activity in the u.s. is still doing well but not really upside surprise like we used to have. and you see financial markets, two months of sharp equity selloff in the u.s., the turnaround in financial conditions, things the fed has factored in. not to mention they have hiked a lot. they are trying to signal we will transition to a more data dependent mode. rishaad: we have been talking about this am of the market is saying there will be fewer fed hikes. .he 10 year went below 3% [indiscernible] >> at this point the markets went ahead of the fed. the market is now only pricing in one hike next year, maybe that is -- rishaad: it is a done deal. >> december is great we have march and june next year. we are

some of these guys may have been in academia but guys like clarida, he spent a lot of time at pimco soely attuned to the market and the market is one of the things that will lead them to a lower growth forecast and a lower rate outlook. >> can they steal the market >> can you feel the market, dave >> oh, i feel it. >> we feel it all day long. >> i always feel it. >> i think the fed is going to take a market single from that it will take a market signal from the yield group but they're looking at the economic data which the market is ignoring and our panelist, the growth and the earnings are reflective and too pessimistic i think what will animate powell is what he talked about earlier. when you walk into a dark room and you don't know where the furniture is, you move slowly. i think they're going to go slowly and look at the data. they'll go along with the market rather than against the market on if next hi on the next hike. >> the days we live for. here to talk about a rate hike and what it could mean, citigroup's chief strategist and the capital market investments chief strategist ho

if you look at the clarida, if you look at the last few big powell speeches, it has not come up herehey have not raise the -- it has not come up. they have not raise the topic. it has been taken as something in the background that was not axiomatic, not regarded as something by the fed that they cared about. vonnie: let's take stock. the dow is down .6%, the 10 year yield is at two point 76%. markets have called. -- markets have calmed. john: they have not gone into reverse. we are in a very strange if you are less inclined to believe the fed is hiking than you were before and if you think they are going to than youg more bonds thought before, bond yields should be going up and not down. vonnie: john john authers, thank you. i want to break in because we want to get to the department of justice. here is ron rosenstein. >> this case is significant because the defendants are accused of targeting and managing service providers. to store firms trusted data and intellectual property and other confidential business information. access tors gained msp, they can steal information that gives

fed vice chairman, richard clarida says he is more concerned about falling short of a 2% inflation targeting above it. his remarks add to signals that policymakers are not yet convinced that inflation has returned to the long-run objective. u.s.er, he says the broad economy is strong and he welcomes of a trade truce with china. >> in terms of the outlook for the u.s. economy, obviously, trade is an important part. at a signal are going there. obviously, trade is an important part of the global economy right now. i think the u.s. economy is in good shape. we can talk about risky scenarios, but i think the baseline outlook is solid. paul: australia's governing liberal party has changed is internal rules to avoid a repeat of the leadership changes that have seen in the country churned through five prime ministers in years. the ministers accused a mechanism requiring a two thirds vote of party lawmakers to trigger a leadership challenge. the opposition labor party adopted similar roles after it on series of leadership changes. global news, 24 hours a day, on air and at tic-toc on twitter, pow

this is a measure that said vice chair rich clarida likes to look at.edium expected change of inflation over the next 5-10 years. it is showing this rate going down near the lowest point of the target that the fed has at 2%. so this is something he looks at as a gauge of where the economy is going. this seems to indicate inflation is not going to be picking up long-term, despite the fact that we are seeing wage gains still on pace with the highest level since 2009. this is not a bad report. in while, this is also playing out in the bond market. while we got some yield curve veryening, you can see much the curve flattening. this is a gap between 10 year and one-month treasury yields. coming down at a new post prices low. so really some concerns about growth are underscoring the market today, especially with trade concerns and especially because we are not seeing the wage inflation everyone expected. heels of those comments, let's dig into the jobs report. payrolls climbed less than forecast in november and the prior reading was also revised lower. shifte

john williams did a great job with you guys the day after the fed meeting and i think john and rich clarida probably going to be two guys to clean up the mess a little bit i don't know how long that will take and what we see from jay will matter in the coming months but this was not what the market was expecting, a kind of -- it reeked a little too much of politics and lines in the sand and then to have the president come on afterwards and fight it out, it has people people questioning the force of the d fed. >> because of internal dysfunction or external pressures or what? >> i think it's a mix of the fed taking its independence very serious seriously. and jay showed stubbornness. there was more hue tillty from john williams and that's what the market wants to see. i don't think the economy is hon a precipice like people do but you want to know that the fed is there if it is. >> evan, do you agree. you can talk about president trump and the tweets but you can talk about other things we've seen including comments from the fed chair. has the fed become politicized >> i don't think so. and i

. >> the way i interpret that, all they said, rich clarida, they will move towards data dependent modeermining policy. by the way that is the correct way to do it. if the economy is showing signs of wobbling or slowing down, and by the way, i think that by 2020 the u.s. economy could very well enter into recession, you want to be very careful because not doing enough, obviously can lead to higher inflation. but doing too much can sort of exacerbate the path toward as recession. all they're saying is, if the economy slows down we will slow down the pace of fed tightening, by the way what everybody would like them to do, nothing with political pressure. david: do they look at stock market going down do they take that in advisement one of the measures they should use in terms of going faster or slower of raying rates? >> keep in mind the federal reserve has two demands price and employment. they want to stablize. they look at financial conditions. they clearly said that. the financial conditions are determined by value currency, equity markets, interest rates. there is a lot of things out

clarida says he is more concerned about falling short of the central banks 2% inflation target than runningbloomberg television said policymakers are not convinced that they are near their long-term objective. he welcomes the trade with china. >> in terms of the outlook for the u.s., economy, trade is an important part. trade is a very important part of global economy. right now, i think the u.s. economy is in good shape and we can talk about risky scenarios, but the baseline outlook is solid. the argentinian president said south america has second-biggest economy is on the right path to a strong rebound in 2019. a currency crisis dragged the country into recession this year and forced him to seek a record $56 billion imf credit line that of clouded his chances reelection next october. he told bloomberg that argentina is in a much stronger position. >> very competitive situation, no? the best moments of argentina. you can see in the trade balance, it's really improving. our exports are growing. and our imports are less. jessica: u.k. consumer spending growth slowed last month as concern abo

clarida joined us and he said it is a solid economy. is that the backdrop for this meeting? we are getting what we hoped for. tom: it is a real debate. christopher: it is but it is also a real recovery. we have got 10 year yields back to 3.75%. we are growing into where we ought to be. that is a frightening point. the growth will not stop on a dime. much of this, whether it is druckenmiller, king on brexit, is what you featured in a couple of issues which is the inequality out there. the professors address that. iseon: what they talk about the difficulty in getting the public to understand basic economic concepts and how they should play out. are talks about how the case for free trade is difficult to make to the public if you do not have a lot o of economic training. they argue that the trump economic policies are supported by economic arguments that do not hold up when you give them professional scrubbing. whenhallenges, what do do the public gets the final vote but they are not making choices that have wise consequences. thecine: when you look at world growth prospects an

i did that with a conversation with richard clarida. and select others.ed the chairman. how is that forward guidance thing going? are we done with the crystal ball gazing and go back to data dependency? >> i think so. i think we are moving away from area,oreig forward guidance certainly in the u.k. that mark carney brought in to it did not last too long. here andyment market another places performed against historical reckoning and was tighter than we thought. but with thepan, fed we will see see more data dependence, optimality, room for maneuver. the rate is moving towards neutral that rate that neither breaks nor spurts the economy. they don't know where neutral is. so certainly less commitment that will tie their hands. one thing mark has found is that if you make amendments and move get grief foryou markets and politicians. enter are jerome how, you 2019 saying mission accomplished on the first stage. he said,rward -- as feeling your weight in a dark room with furniture. tom: thank you for that definition. is executive editor of the dismal science he

richard clarida sees a solid economy, and somewhere out here is knowing where the inflation-adjustede get back to normal, or a new normal? >> a new normal. we are in a low real interest rate world for the foreseeable future. it is a global phenomenon. tom: 1958, new zealand economists comes up with the phillips curve. it has been beaten to death over the years. the heart of the matter is do we need to take our analysis back to where it was, which was a nominal gdp, worry less about the real economy, where we were 20 and 30 years ago, or do we stay slaves to inflation-adjusted analysis? >> i actually favor looking at the real economy and inflation. tom: thank you. >> we have a dual mandate that makes it easier. tom: fair. >> to look at nominal gdp is losing information, because the components are individually important. want to showle their information is the present economy, isn't it, the nominal economy? >> nobody cares about nominal gdp. people care about the real purchasing power, which is inflation and real wages, and about employment, for which real gdp is a proxy, so i am happy

you're giving me the richard clarida line. >> it is true. he is spot on the facts.d be to this big recession at the end of this year or next to be theh seems direction that equity markets and bond markets are going through right now? >> i think there was a small hint in the beige book yesterday, where there was talk, basically corporates are feeling margin pressure on the labor cost side and because of the .isruptions of the tariffs shrinking margins is something equity operators have been expecting for a while, but it is not a good thing for the stock market. >> it is very different. i totally agree. francine: let me jump in. >> it doesn't look fantastic. francine: go ahead. finish your thought. >> i am in absolute agreement with that. are wide, sogins there is plenty of room for compression, allowing for a more expansive recovery, higher rates , to your point, not a great outlook for the stock market. tom: we need to be on speaking terms of monday next week. can we go to francine in london? francine: this is the deal. when you look at the yield curve inversion, wh