we're also going to hear from bill dudley later on today n.une, his comments were seen as hawkish, and nothing has really changed. inflation is still low. the economy and labor market is still holding up really well. do we finally get some real support for the dollar here on that? >> i think support from the dollar is largely going to come from positioning, squaring of positioning and potentially some technical correction rather than purely on the fundamental front. of course it will get a massive upside surprise in c.p.i. numbers and given where the market is currently sitting, having priced in just barely 125 basis point hike over the next 12 months or so, we are likely to get support for the dollar, even on the fundamental front. but i think right now, numbers close to consensus are likely to provide a fundamental support for the dollar. alix: so sebyastian, from your end, if the dollar isn't vulnerable necessaryly to any kind of real upside or shakeout, what is the biggest asset class that is most vulnerable if we start to see inflation wi

the head of the fed knows that these are important inputs, but you can't set aside when bill dudley mentionsg by the way, he's very well scripted and tied into the board of governors and the board of governors staff. i don't think bill says anything that hasn't been fought through by several people, including people in washington >> richard, we appreciate it, as always talk to you again soon >> all right thanks so much richard fisher, the former dallas fed president, joining us up next, john tracks unusual activity in a chip stock that 'll ed 96% over a year wefind out how he's playing it now straight ahead on the half >>> hello, everyone. i'm sue herrera. here's what's happening at this hour senate majority leader mitch mcconnell releasing a statement condemning hate dwrugroups and reports of a rally in lexington. he said the messages of hate from white supremacists, kkk, and neo-nazi groups are not welcome in kentucky or anywhere in america >>> the border between northern ireland and the irish republic is under the spotlight as the uk prepares to release proposals on what should happen whe

bill dudley, who is a close ally of yellen, said just last week that he still favors a third rate hike this year and expects to see firmer wage gains push inflation up toward the feds' 2% objective. the other big question mark is the possibility of a u.s. government shutdown. president donald trump's comment about building a wall even if it means shutting the government down clearly has the market on edge today, but could that make the feds put the market on hold? they're putting the odds at a september rate hike at 40%. >> so with central bankers meeting later this week, should you now shift your attention away from washington to the fed and the economy? michael, founder of ceo debt management, talks to us about that. good to see you, michael. as always, welcome back. >> sue, good to see you. >> i think one of the problems of trying to shift away from washington is some of the things the president brought up are so very important to wall street, like the debt limit, like the government shutdown and the like. how do you make that pivot from washington to the fed? >> so here's the quest

tomorrow, we will have the new york fed president bill dudley. we will also get the u.s. july pbi.n friday, the last month's cpi data. probably the most important date of the week. for a little bit of an idea what this will mean, i want to bring in jewel cracjoel. all eyes really on the cpi data for the most part on friday, right? joel: that's right. maybe a little context or background on this. earlier this year, measures of inflation softened. we know there were factors behind that softening. unlimited data plans introduced by a major carrier, some prescription drugs coming off of a patent, and the prices being brought down by generics, but there was a softening in prices as well. why do we think inflation is likely to gravitate to 2%? the fundamentals point in that direction. survey-based measures and expectations still support 2% inflation projections. second, the economy is doing well. labor markets are tightening. we expect 80% handling on the unemployment rate sometime next year. third, the dollar is less valued this year so far. 5% to 7% depending what measure you look at.

bill dudley weight in earlier. -- weighed in earlier. >> a year-over-year number of 2% after some of low ratings drop out of the statistics. to 10 months from now, so it will take some time. vonnie: from work i want to bring in our guest. thanks for joining. i want to get your thoughts on this market mainly. first of all, let's talk about inflation and whether we are looking at any healthier growth in the global economy. >> overall growth is stabilizing. global growth bottom 18 months, 24 months ago. the curveball here is if you got growth that seems to be maturing, this acceleration in growth implies very different leadership than in the last 18 months. vonnie: just to prove what we are talking about or illustrate what we are talking about, let's have a look at 9286 in the bloomberg chart library. it shows consumer spending pulling back, matching the cpi decline. it is honestly related to health care costs and also related to things like cell phones. satya: yes. some of our work, we raised the deflation, and this idea links back to this recent amazon announcement to purchase whole f

and bill dudley says it is reasonable to plan next month.e also said he supports another interest rate increase this year if the economy evolves at -- >> we continue to monitor growth trend which we think will push inflation over the medium-term. >> theresa may will visit japan later this month for the first time since visiting. as britain -- $4.6gates has given way billion worth of microsoft stock. 64 millionk shows shares back in june. global news, powered by more than 2700 journalists. some're just getting chinese data. this is for the month of july. financing pretty much in line. the estimate we had was for one billion. there is quite a lot going on with trump and china. trump also calling for a review of how china handles intellectual property and that has prompted a firm response from beijing. >> you have the new monthly picture to look at china. let's get on to politics. first of all, donald trumps troubles are deepening as the fallout from charlottesville is deepening. >> dennis fraser was the first to walk out. trump has come under

bill dudley says do not present just expect to present anytime soon.berg surveillance, i am francine lacqua in london. tom keene in new york. tom: the korean peninsula is front and center after the president's extended press conference yesterday, kevin cirilli to lead off the 6:00 hour, but you really see it in the vix. it is front and center. francine: let's get to the bloomberg first word news. president trump is not backing off his threat of retaliation if north korea strikes the u.s. or its allies. he warned them not to cap -- carry out a missile test and said north koreans should be very nervous "because things could happen to them like they never thought possible." trump has escalated his war of words with mitch mcconnell and says he is very disappointed over the failure to eliminate obamacare. he urged mcconnell to get back to work. election six's weeks from now, she is favored to win her fourth term as chancellor. she has a lead over her primary challenger martin schulz. she will lead a 50 stop campaign tour across the country. international ag

. >> holly, on the fed, new york president bill dudley said about an hour ago he would imagine in their september meeting that they will begin the process of selling off some of the bonds on the fed's balance sheet. do you think the market is ready for that is that priced in at that point, or what are you seeing >> i don't think it's entirely priced in yet, bill, although he did make those comments and we saw treasury markets sell off a little bit hon those comment, though if you look at it he didn't say anything really different from what he's been saying regarding his outlook for the economy. he still expects one rate hike by the end year if you expect a lot of fed members, they will say a lot of the same thing and whether the market is pricing that, it's the same story i'm not quite sure if they said they will start reducing the balance sheet in september or they will start laying more groundwork and details for them for the markets to digest. even though a lot of the fed members have said they don't think that there's going to be big repercussions, big market moves, volatility regar

fed president bill dudley said we can look past the inflation. >> the fear has been that inflation wasto slip and you wind up with a disinflationary environment and these retail sales numbers are just what the fed needs to not worry so much about that. when you continue to have consumer spending at this pace, which is looking like it is going to catch up with the survey data, then you can have a scenario where the federal reserve will start to taper it's balance sheet. -- taper its balance sheet. particularly on the inflation sign. david: how important is this data to the fed? is this more a matter of we want to hike and this gives us an excuse? by itself, that one number is not going to move the it is one of the requirements for the federal reserve to be back into the market. the implication of your statement that the fed once the hike but are reluctant to do so when data is starting to move lower. this type of data and especially with the upper revisions are important because you have not seen a lot, lately. that is just enough to bring them back into the market. you saw some of it t

and new york fed president bill dudley, he's speaking later this morning. as for earnings, a lot on the retail side. kohl's, macy's, blue apron, canada goose reporting before the bell after hearing from nordstrom and snap >>> now time for the trending story this morning starting with a giant inflatable chicken meant to resemble president trump is getting some buzz on the internet it was placed near the white house yesterday as part of a protest. the 30 foot chicken features golden hair, pants that some say resemble president trump's >> some say. it's clearly meant to resemble him. >> he's not even there though. if they wanted him to see it, go to new jersey. >> he's not much of a chicken though >> no. not at all. >> what animal is he most like >> oh, i don't know. the president of the united states i don't want to even go there. >> there we go that's outside the white house >>> the mooch is headed to late night. anthony scaramucci will appear on "the late show" is stephen colbert on monday. colbert saying this is just a heads up for our censors to get ready

as bill dudley said last week in a speech these aren't a bad thing.ositive supply shocks are creating lower prices in a number of goods and services for u.s. households. this increases real purchasing power for the household. it's very different than low inflation emanating from demand shocks. these are supply shocks. they are not bad things. statistics.le of core inflation on friday 1.7 year-over-year. the 10 year average is one point 73. core services represents 75% of the inflation basket is printing 2.4 year-over-year. it is a if the fed soul-searching on inflation and doesn't quite know why inflation is persistently low doesn't that by extension mean they are at risk of making a policy mistake? the probability that policy stays easier or more accommodative and creates financial imbalances. i don't think we are there yet. that is the risk if we try to fix the degree to which technological innovation is impacting inflation negatively although it's a positive for the long-term economy. the probability of financial imbalances building overtime. julie

have the northeast to gain back and actually still 2, 3% from the intraday highs on the day when bill dudley, i think the fed is the most important thing two ingoing into september. a guy who said today that the inflation expectations in the labor market are higher than people think i would be more concerned of that, so buy the financials. >> so the weak cpi last week was sort of a head fake? it sent the wrong message to investors? >> look, the fed, if you look at where conditions are, financial conditions are so much easier than they were even a couple months ago the market's at greater highs. races are down credit spreads are tighter you have an environment where the fed cannot do what they need to do and i think in a month, people are going to be like, whoa, what happened? i think the fed's going to move more than people think. >> i don't know, i feel like the fed has been telegraphing a lot of this already, right this question of how big, how quickly taking the balance sheet and i think the fed didn't move, they'd say, all right, what are they seeing in the economy that makes -- gives th

>> he would have been over at -- >> at goldman and in the context of bill dudley running the -- >> andand. >> it's very unusual i think the context of this might be, how do i say this? there's a concern. >> yeah. >> about people being appointed to the fed who are off the reservation. >> right >> and you winced, melissa >> well, i don't really know what that means. >> what does that mean >> meaning non-ph.d. or you mean crazy? >> no, no. like people who support the gold reserve system >> oh. >> like people who want -- like people being appointed to the fed who want to wipe out the fed. >> right >> and i think among economists and among people who follow the fed, and perhaps even among the people at the fed there's concern about there being not just one, because one is okay, but multiple people appointed by the trump administration who are off the reservation. >> right >> and i think what bill is saying here is that he doesn't see gary cohn as being off the reservation. and being an economist or not an economist is not the criteria. >> real quick. just now that general kelly has taken th

come down with the weakness we have seen in the dollar this year and build ugly has been vocal -- bill dudleyat they are focusing on. we do think they will focus on the balance sheets and that they will raise rates in december. i think we need to see some form of stability moving back up. i've we don't -- we don't think it needs to be dramatic. they do want to normalize rates. tom: i would say that is true, as well. thank you so much. thoughts on good the german election that is coming soon. much toext hour, too talk about, including charlottesville and korea. markets, as at rate well. it is a beautiful summer day in new york city. yankees-mets tonight at new york -- in new york. that is a good and wonderful thing. ♪ tom: this morning, global markets, modestly risk on. gold modestly retreats. trump quiets on north korea as the general's managed the presidential message. a dis-united united kingdom. conservatives attempt a united front as they threatened to release discussion papers that will be discussed. , a white house messages many-sided message, as the president fails to rise to the occas

in the past she said no, but if you look at the bill dudley argument from last week that we are seeingal conditions loosen and markets continue to set new records, that is something to be concerned about. she could endorse that and that would be a concern for the markets and they would start to see that fourth rate increase is priced in. alix: much more on what we will hear from janet yellen on friday. the head of global economics will be joining us. yellen, draghi, which is more important? this is bloomberg. ♪ ♪ jonathan: from new york, this is "bloomberg daybreak." i am jonathan ferro two hours away from the cash open. futures are stable in the united states. we go nowhere on the dow and pretty much nowhere on the s&p 500 after two street weeks of losses on the s&p for the first time since the middle of may. we find a bit of stability in today's session. in the fx market, very muted. euro-dollar going nowhere at 2.1764. bank of america merrill lynch survey pointing out this one, catching the story as the most crowded trade in the fx market, it's the short dollar story that is changin

class of thought bill dudley's, very important. to move away from the data dependent.efer unwinding of the balance that comes in play in october. there is financial stability. this is something the fed is concerned about. it is very important. concerned should it be about the fx channel? think they will become increasingly concerned for the obvious reasons that a stronger euro could easily derail the euro and economic recovery. add to disinflationary price pressures. having the last ecb policy meeting where he seems to be very relaxed about what happened with the euro, we saw the ecb minutes last week that there is some concern. the fx markets have a tendency to try and find out where the pain threshold is for central bank and we might be in the middle of all of this. the dollar is the key issue. for debts thethe barometer for investor confidence. that continues. i amuro key is going and pretty sure we will see some becausentervention clearly the euro zone stand ever-increasing currency. out today were he talks about low-inflation demon bothering the ecb and the fed, d

new york fed president bill dudley on deck to speak, and markets get the latest read in the u.s.august 10. m alix steel alongside david westin. jonathan is off today. we head into the open of trading here. s&p futures down by 10 points. but remember, that dip was bought yesterday. s&p closed relatively flat on the day. a euro-dollar treading water around 1.17 as the dollar moves slowly higher. you have some buying coming into the treasury market. yields moving down by one basis point after a mushy auction yesterday, $15 billion of 30-year notes are going to be auctioned at 1:00 p.m. gold up for three days in a row, up.

starting today and through the week we hear from presidents bill dudley and robert kaplan. on inflation with the cpi numbers. joining us now is gina smiley. welcome back. speak --on the fed what will he be looking for? we have the numbers coming out. a lot of people got hired. they have to get the numbers up higher so what are we looking for? the way thew from fed functions is that they will not preview december yet but what we might see is continued confidence that they will see inflation move up on the back of the employment numbers. numbers withment wages coming and inflation is coming so we may hear that. on the balance sheet, we may hear a little bit of chatter. theirre still playing cards close to the chest but we saw last week that we have clear signaling that it is coming. david: what about cpi numbers. what are we looking for? what might make a difference? a: it is hard to overstate how important these numbers are. they will be looking at the long trend. and then indexes like apparel, you will be looking for revision there. that will give them confidence. caroline:

tomorrow we will hear from new york fed president bill dudley. we will get ppi. all aboutet inflation. still with us is david kotok of cumberland advisors. your take on the inflation story. >> there isn't any. it's interesting. we had 50 people in maine last weekend and everybody is talking about inflation between one and two. and is 2 too high a target? imagine the conversation. inflation is not an issue in the put folks we gathered with. and we don't think so either. alix: we had a really strong two-year auction. if the auction was so strong it means the market is now discounting no rate hikes for the rest of the year. >> or at least no more than one. and it looks that way to us. there's a message here. why are the interest rates the way they are. there is no fear of inflation. there's a question about a big debt expansion in u.s. dollar terms. credit spreads are tight. is verydudley's message important now. he's the one who introduced the betweensed -- pause trying to get the balance sheet down a little and trajectory and interest rate hikes. what he says is r

dropped from probably 50% post the fomc meeting to about 30, 30 5%, back up to 45% post build dudley.- billt expectation of a september hike again. aren't they right at financial conditions have loosened, rather than tightened? there are concerns on the financial stability issues with bubbles and asset values. should they be as concerned? i think the reason why they want financial conditions because the labor market is tight and that should result in inflation going up and eventually if they do nothing, it will actually overshoot. i think he's right, it certainly the case that they have raise interest rates now and the financial conditions are easier. seems like there are two things that they are not a come pushing. going back to the taper tantrum, in a short. of time before they had chance to raise the rates, now it the opposite, they were talking clearly about tightening policy and financial conditions are easy. the dollar, instead of going up, is quite. it's definitely in our view a different situation where they are going from being concerned that financial conditions will tighten too f