economy. -- at the state of the u.s. economy.ext year the current expansion, which began after the global financial crisis in 2009, will be ten years old. that will make it one of the longest periods of sustained growth in u.s. history. expansions don't die of old age, but after such a long period of growth, strains typically do start to show. in the last few weeks, financial markets have been very turbulent, refrequenting in part -- reflecting in part concerns that this long expansion may, indeed, be coming to an end. the dow is off around 10% from its peak of a couple of months ago as investors fret about a number of issues that could derail the economy. u.s./china trade relations, rising interest rates, uncertainty in britain over how the country will finally exit the european union, if at all. there are political worries too. this week we witnessed a testy oval office meeting between president trump and the democratic leaders of the house and senate where president trump suggested he was quite willing to shut down the governm

economy, it is not a good choice. even for a good choice consumers in the long run because you are putting the economy on a lower trajectory, building debt, weakening our thecity to make things, industries where we could be leading innovation over time. while economic theory has said, that is great, let them send us stuff, it is not great. it is a narrowminded view of what it takes to be a flourishing society and what it takes to have a strong economy. if you take the view -- the ander view seriously, realize that is important to what we care about in this actually it is not enough to have people send us stuff. we need to make sure we're making stuff here, too. host: pat is a displaced worker. what is your situation? caller: minus similar to the man who called before, an i.t. worker. was in the 1970's when i high school we were told our future was knowledge jobs, so we all went to that route. then we were forced not once but twice to import workers. you are importing high skilled workers, displacing americans who have

economy did recover steadily if slowly at times. three years ago, the committee came to the view the best way to achieve our mandate was to move interest rates that are more normal in a healthy economy. we raised our target range for the short-term interest rates by another quarter of a percentage point. as i mensed, most of my colleagues expect the economy to perform well in the coming year. many participants had expected that economic conditions would likely call for about three more rate increases in 2019. we have brought it down a bit and more likely that the economy will call for two interest rate increases over the course of next year. we always emphasize that our policy decisions will change with the incoming data will change the outlook and given recent developments, the statement notes we will monitor economic developments and assess their implications for the economic outlook. i will provide some additional context and detail starting with policy over the last year. last december, the unemployment rate was 4.1% and inflati

now this is, it is my biggest worry, hours in the global economy -- that of the global economy.ful, then china cannot export deflation or as much to the u.s. as they had in the past. if they have to export deflation somewhere, they will export to europe because japanese exports from china are down. european imports from china keep growing. that deflation will go to europe. that puts the ecb in a difficult situation. the real crux is the chinese domestic slowdown plus the trade discussion. it is a really bad time for that to happen. yvonne: we will talk about the ecb in the next segment. let's stay on china because we have seen this interesting turn of fortunes i guess when it came to the equity market. it was like $2.1 trillion of market investment lost this year, every sector in the red. in the beginning of the year we were saying msci inclusion, economy on solid ground, bonds and stocks doing well. -- stocks doing well, bonds doing bad. that we also saw things reverse. what is the proper playbook for china? deleveragingbeen all year. our question back to people is how can the

economy, it is not a good choice for the u.s. economy. it is not a good choice for consumers. you are putting the economy on a lower trajectory. your building up debt. you are weakening our capacity to make things. you are weakening the industries where we might be more productive over time. while economic theory has said for a long time that is great, let them send us stuff, it is not actually great. it is a narrowminded view of what it takes to be a flourishing society and to have a strong economy. seriouslye the view -- if you take the worker abuse seriously and realize that is important what we care about in this country, then it is not enough to have people send us stuff. we need to make sure we are making stuff year. host: pat in new jersey. cap is a displaced worker. what is your situation? caller: minas similar to the man who called before. 70's an i.t. worker in the -- in the 1970's. we were told our future was in knowledge jobs. we all went that route and we -- we were forced not once but twice to import workers. you are displacing americans who have to transfer thei

economy has been adding jobs. wages have moved up for workers across a wide range of occupations, a welcome development. inflation has remained low and stable and is ending the year a bit morsi subdued than most had expected. although some american families and community continue to struggle, and some longer-term economic problems remain, the strong economy is benefiting many americans. despite this robust economic backdrop and our expectation for healthy growth, we have seen developments that may signal some softening, relative to what we were expecting a few months ago. other economies around the world have moderated over the course albeit at still solid levels. the financial market volatility has increased over the past couple months, and overall financial conditions have , tightened and have become less supportive of growth. in our view, these developments have not fundamentally altered the outlook. most fomc participants have instead modestly lowered their growth and inflation forecasts for next year. the pro

slowing the economy. people have to be cognizant. whispers on the street, trading desks they would cut quantitative tightening in half, cut 50 billion to 25 billion. markets were hoping for a christmas surprise from the fed. they didn't get it. connell: they didn't get it right, kristina? >> to the fed's defense the fact they used the word some, allowed them to leeway. they can't show they're reacting to markets. they're supposed to be independent. connell: they might have thought they would freak out. hal, what are you going to say? >> i agree they can't react to equity markets but there is so much more to react to which is not inflation. i think they're more worried about being bullied by president trump. they shouldn't be. that shouldn't be taken into consideration. connell: definitely going to bring that up. you brought it up now. it is interesting, i know a lot of people have divergent views on this, i don't know what yours is, jonas, how the president's tweets and pressure, clearly trying to ininfluence the federal reserve. he

economy does still have its weak spots and that is giving some worry is the u.s. do you think heading towards a recession i think the u.s. is i'm what i call that unsustainable boom at the moment. we've had this very late cycle fiscal stimulus and that if you like is hothouse economic activity during the course of the last twelve months or so but that stimulus is going to start to fade and the legacy of that stimulus is two very large deficits a very large budget deficit and a very large external deficit the tariffs that mr trump is imposing on imports will not change that fact the u.s. is consuming far more than it's producing and at the moment that means that the trade deficit will expand and in many ways the u.s. economy right now is looking similar to the way it did in the mid one nine hundred eighty s. during the period of reaganomics it was another era of twin deficits and it was another area that ended rather badly it was a period of extreme volatility in financial markets and also in policymaking so my concern is that the u.s. looks good for now but that t

economy even for the united states this is will be eventually having negative impact on the economy through high inflation through higher pressure that will freights a federal reserve which will be forced to react to such as such a trend in the in the inflation then they mix so these to believe over the global trading system is one of the key and they get it from bets on the global agenda and the second one is of course on growing the slowdown. of the global economy do you think fundamental reasons i mean and of girls in the united states and the europe structural slowdown. in china and blow all blow up of the unsustainable growth models in countries like argentina and turkey. mr rushton how has your ministry coped with the task of becoming the ministry of the future this is the definition that we heard from you once well it's pretty simple we need to make the seasons now which will impact the future of the country so when you propose ideas and you know that will be having a long lasting impact so we're in now what if you're the. business we're looking at what will be happening within two y

in the economy. jeff: have you reached out to ocasio-cortez? mr. bradley: a lot of members that we anticipate being able to work with and frankly like many republicans, not able to work with on every single issue, we're all going to have disagreements, but finding those areas of agreements that i talked with kate for example are places to make progress, we fully expect that to happen. jeff: can i ask a question about the infrastructure package. mr. bradley: of course. jeff: additional investment from private companies and state and local governments to reach a price tag, $1 trillion infrastructure package. how high have you thought of looking at that? how important is it in federal dollars rather than saying we will leverage other money for this package? mr. bradley: so we unveiled a plan, an infrastructure plan last year that actually does both. we believe we need increased investment, how to pay for it, roads, bridges, transit programs for example is a modest update in the fuel user fee, the gas ta

one of the things about the economy. some people score the economy based on 3.4% unemployment.ow about we scored like it was the real battle it is between us and the chinese. chinese, 1.3% growth. i was at the world economic for number china. company after company told me about leaving china and building their new factory in south korea. a lot are being built in the u.s. but we don't see what's moving out of china. what china is dealing with is we are in this so-called war. and we are winning it. we are growing it. but china has decelerated from its 10% to 1.3%. they are in a free-fall. judge jeanine: i know we have a question from our audience. i believe, sir, ernie, i will just call you ernie. ernie's question is what does the situation with china mean for the economy, and could things get worse? >> i think i just gave you apart of that. >> china is in a free-fall. china still has more than half a billion people. they are trying to get modern 21st century jobs for. and they don't have a way to get it. and the rest of the world is starting to eat their lunch and they have an i

slowing noble economy hitting exports and this ongoing trade war.l else. there is a popular view that china can control all of this but this time there are doubts as to whether they can keep this under control while hitting long—term objectives as well. bank you very much. now let's brief you on some other business stories. global debt hit a record $181; trillion last year — according to the international monetary fund. that's well over double the size of the world economy — and equivalent to more than $86,000 per person. the biggest borrowers are the world's top three economies — the us, china and japan. earlier this month the imf warned the ‘storm clouds of the next global financial crisis are gathering' — with excessive debt one of the big risks. the french government is seeking candidates to replace renault boss carlos ghosn, according to a report by reuters. at a board meeting on thursday, renault directors were briefed on an investigation by their alliance partner nissan, that led to ghosn's arrest and dismissal as chairman for alleged financi

even in the strong economy.f there is a slowdown, what does that mean for republicans and the president in 2020? >> it looks like it will be a disaster because as you said just a moment ago, the president hinged his entire presidency on the economy. he hasn't just said the economy is doing well on my watch, this is the best economy in the history of the country. he has taken full credit for things that he doesn't deserve full credit for because a lot of this stuff gets set in motion before and a lot of it is about the end of the obama presidency. he then has to take full blame for it when in the second two years of his presidency after his policies have had more time to kick in, the economy is doing worse. he'll try to deflect that and come with trump conspiracy theories and blame it on barack obama and hillary clinton but it won't fly. >> the obama economy for the first part of the presidency. he's still riding it. >> so it won't fly and the other problem is, you know, a lot of republicans, a lot of his support

surplus economies versus deficit economies. rishaad: this is it. japan, looking at the yen.ough we have this incredibly loose policy and easy money. the economy is performing ok at this stage and we think that bank of japan is out of its limits. it cannot do anymore. it has already ease. rishaad: you have the low diminishing returns. any furthermake difference for the inflation target, which is as loose as it was at the beginning of the year. patrick: that's right. it will not be loose. high inflation is bad for any currency. deflation is not a bad thing because it protects the value of assets and the value of the currency. patrick, always a pleasure, never a chore. patrick from cibc. manufacturing is a bone of contention for the u.s., but, how close is it to meeting its goal? this is bloomberg. ♪ beijing's global ambition played out in the china 2025 plan. the bone of contention with the u.s. the report said beijing may delay some parts of the program and faces challenges at home. rishaad: they do include things like r&d spending. as well as difficulty actually --loying cap

it's a growing economy we've added 20 million jobs during this expansion so this is an economy that haserated enormous job growth. i don't expect 3% growth but i see real wage gains. >> it seems like you think the market had overdone it on the pessimism. are you surprised at how from an all time high october 3 how incredibly the market has turned to have this amazingly pessimistic views. do you think it's o people in m quite a bit. there are times when there's disagreements about where the economy is going what i sense is not so much a fundamental difference about is growth going to be 2% or 2.5%. there's more concerns about down side risk and whether it could go wrong with the global economic situation or things like that. maybe we emphasize a lot, our modal forecast where we expect the economy to go. there are down side risks to be watchful for i think markets are very attuned to what could go wrong we need to be so. >> we should talk about those risks. how concerned are you about what you've seen in the global economic numbers how does that affect the u.s >> i want to roll back about

world economy but what we do know from history it sounds like you approve this and the next financial crisis is so when's it going to hit let us be ready for it then shall we but. i'm not smart enough to tell you when the next financial crisis is going to come but what i am i think clever enough or cognizant enough of history to know is that populism doesn't tend to end well what i know from my experience is that bad policy of leads to a bad outcome and in the context of populism we are going to be confronted i believe by a lot of bad policy choices a lot of nativism a lot of interventions which perhaps are necessary a lot of wrong turnings and i think that is again something which leaves us in a very dangerous very threatened situation all right thanks so much for your analysis on that russell jones there giving us his thoughts on the outlook for the year ahead well still to come on counting the cost microchip in employees is it ethical would you volunteer why some companies are already doing it. but first nearly two thousand venezuelans cross the border into peru every day and that'

economy does still have its weak spots and that is giving some worry is the u.s. do you think heading towards a recession i think the u.s. is i'm what i call that unsustainable boom at the moment. we've had this very late cycle fiscal stimulus and that if you like is hothouse economic activity during the course of the last twelve months or so but that stimulus is going to start to fade and the legacy of that stimulus is two very large deficits a very large budget deficit and a very large external deficit the tariffs that mr trump is imposing on imports will not change that fact the u.s. is consuming far more than it's producing and at the moment that means that the trade deficit will expand and in many ways the u.s. economy right now is looking similar to the way it did in the mid one nine hundred eighty s. during the period of reaganomics it was another era of twin deficits and it was another area that ended rather badly it was a period of extreme volatility in financial markets and also in policymaking so my concern is that the u.s. looks good for now but that t

the us economy, notjust for next year, but in 2020.the stock market is really take a nosedive, certainly on wall street, on concern about what's ahead. there are several things happening here. one is that this year the us economy benefited from a very big fiscal stimulus from president trump, so tax cuts for the corporate sector and for households, and that boosted growth well beyond the sustainable rate. so we had growth between three and 4% this year. this is not sustainable. the markets are realising the effect of the fiscal stimulus will fade over time. and growth in 2019 is likely to come back to two or below 2%. so below 296 growth back to two or below 296. so below 296 growth in 2019, that's nowhere near recession. some people are saying that 2020 people could be heading for a recession. what do you think about those predictions? 296 is far from recession and it is sustainable. i expect growth below 496 sustainable. i expect growth below 4% for longer. i think it's natural that people are worried about recession because the fed

saying our current economy is obama's economy, not president trump's. i am setting the record straight. "trish regan primetime" right after this. i'm ken jacobus and i switched to the spark cash card from capital one. i earn unlimited 2% cash back on everything i buy. and last year, i earned $36,000 in cash back. which i used to offer health insurance to my employees. what's in your wallet? after bill's back needed a vacation from his vacation. so he stepped on the dr. scholl's kiosk. it recommends our best custom fit orthotic to relieve foot, knee, or lower back pain so you can move more. dr. scholl's. born to move. voice-command navigation with waze wifi wireless charging 104 cubic feet of cargo room and seating for 8. now that's a sleigh. ford expedition. built for the holidays. and for a limited time, get zero percent financing plus twelve hundred and fifty dollars ford credit bonus cash on ford expedition. ford credit bonus cash ♪ there's no place likargh!e ♪ i'm trying... ♪ yippiekiyay. ♪ mom. ♪ >> if the justice department takes the position that

economy was more bust the committee slowed and when the economy performed about as expected the committee moved in line with the as we did in tion 2017. we know the economy may in the this kind next year as year. there are two policies available today. e saw a rising rajectory or growth and today forecasters that h in 2019.kted growt growth 3% this year 2.3% in 2019. this , xe strengthened will be policy providing a boost to your target and today, the and a quarter percent. if sometimes will differ. and are this this change have a strong labor hashth and worth noting the summary is a comp pilation d the individual relations an we point to the media to illustrate the broad middle committee.he useful ve it provides information about participants not a ng that it is onsensus judgment and does not plan.sent a meerj pace more destination is redetermined and we'll adjust pest we can. and we'll continue to make our sis.tment based on anam thank you and i'm happen where questions. feds respond to year.tion moving into next 2018 has been the strongest year crisishe fifth financial and we have had

economy.expect now in some fragileainly -- fragile balancing the needs to be done. tom: there is more attention focused on this meeting. but we have spoken to, there seems more than and other years. they are setting the direction of travel for the economy for 2019. they normally set themselves targets which are released in march next year, but we will get , we expect a statement on the back of this meeting that outlines some of the priorities policymakers are setting up for, and we expect additional fiscal stimulus measures. we could get more details on tax cuts. we could get a change to the budget deficit ratio as well. that will be relaxed or loosened to allow more fiscal wiggle room . in terms of opening up we are expecting additional measures that will be announced on the back of the meeting of opening up the services sector according to bloomberg intelligence. they say there will be a focus trying to attract more capital flows into the chinese market, foreign direct investment. bloomberg

economy? it makes me worried about profit margins and i think that is what investors who are worried about equities have to worry about. the s&p 500 never had a higher profit margin than it does today and the economy continues to expand, but it does not translate into earnings growth the way we have in the past. anytime the economy moves past you are going to continue to get economic growth as the base case, but the earnings growth is not going to fall through as much. francine: does it mean that it leads to a domestic downfall for equity markets? patrick: you will get a wealth effect. in some countries, probably the u.s. in particular, when the u.s. stock market weakens, that ties into the confidence of the u.s. consumer. that is the only thing the fed should we worried about in terms of the wealth effect, not just elevated multiples to more normal multiples, despite the fact the economy has not deteriorated significantly. i think the environment is not going to slow the economy. the profit m

on the economy, they evaluate the economy as strong. it lowered gdp for 2019 though by 2.3%.nemployment is unchanged at 3.7% took one tick off the forecast for inflation next year to 1.9%. the current assessment of the economy is a carbon copy of the november statement the labor markets continue to strength economic activity is rising at a strong rate. unemployment rate declines household spending continuing to grow strongly and business investment moderated let me give you details on the rate outlook you may want to get a pencil out for this 2019, two members say no rate hike four members say one hike. five members say two hikes and six members say three hikes or more on 2020, nine members still want to go above neutral and four want to stop there so a more dovish fed in the forecast and in the statement, but the question you guys will debate is it as dovish as the markets wanted to hear back to you guys. >> all right, steve, thank you very much. i just want to get a check of the markets quickly here we have seen a sharp reaction. the s&p 500 is now higher by 11 points we pa

on the planet looking at the trillion dollar economy. before microsoft over took its tech drive or apple as the world's most valuable publicly listed company this week it's been sixteen years since the software giant has held the top spot microsoft shares jumped three percent on wednesday pushing its market value to eight hundred fifty billion dollars it's become a major player in the cloud computing services world britain's economy will be worse off outside the european union no matter how it leads that is the upshot of a report from the bank of england looking at post briggs it scenarios in the worst case where britain crashes out of the block with no deal the central bank says the economy would shrink by as much as eight percent in a year while under the agreement being pushed by prime minister to resign may the economy will be about four percent smaller over fifteen years a woman may face a much wider wage gap than commonly cited data indicate that's according to a new study by the washington based for women's policy research economi

economy and the pound versus the euro?re sitting toward the sterlingdollar, and and dollar. i can see this sterling-dollar falling to 1.23. that will happen if the current chaos continues. break 1.23, that if the situation changes we could see sterling-dollar rallying regardless of what the dollar strength is on the other side. it will continue to weaken because of the fed. there are likely chances that by q1 we could see sterling-dollar touching 1.28 or 1.30, orecially if we have a deal are sailing towards a happy landing. caroline: may be time to start traveling. slam is sticking with us. sharyn o'halloran is coming up 11:000 a.m. in new york, a.m. in london. ♪ ♪ i am caroline hyde in london. tom keene and francine lacqua are off. brent crude briefly dipping below the $50 mark for the first time since july last year. oil prices have been hammered amid fears of global growth and that u.s. supply will lead to a surplus. is the us from riyadh economic director of research and served as an advisor for the saudi arabia depart

strong the fedex economy, the ppg economy, the micron economy, the economy of all of these other companies that have been impacted negatively by tariffs and trades, that's what the market has been listening to the market, with all due respect to your former colleagues on the fed, maybe the market knows more than the fed does. >> i think the market always knows more this market was pumped up. i like to say we had a bump stock monetary policy adding the balance sheet. now there's just a price beil paid we warned about this, jeremy stein, myself, some of the others including jay powell in his first meeting. june of 2012 we're going to pay a price for this we have to be careful and make sure we don't let it get so far carried away you have an enormous snapback in terms of correction we floated the markets at the fed. no question about that and now the question is how far did this run so the market bottomed at 666 in march of 2009. it's now today trading at 3.8 something x. it was up to 4x. that's 14% compounded since that interday low that's a hell of a run and markets come and go. so i think

economy growing at rapid enough pace to keep the world economy falling off a cliff.me where the fragility is associated with interest rates, right? so mortgages spiking, hurt the housing market. we see where new car sales are really limping along. you know, the fed sees this. >> hopefully they do. i think that is of concern to the marketplace. what is it housing sector, share prices for year-to-date are down 27%. they have gotten clobbered. that tells me fairly soon we'll see that 10-year treasury yield move lower. i think, by early next year, the 10-year treasury yield, no higher than 2.75%. charles: will it invert? >> we have a slight inverse between the five-year treasury and three-year treasury. charles: the 10 and the two? >> a warning side to the fed they're being a little too tight on the shortened of the yield curve. maybe it is about time for the fed to announce a halt to the rate hikes, in order to prevent themselves from being forced to cut rates later in 2019. charles: i have got to wrap but how is it for a economist all the geopolitical stuff playing in

economy are growing repeated attacks from u.s. president donald trump on the federal reserve and its characters' powell have unsettled nerves as has the prospect of an extended government shutdown. now trump has tried to curb the growing unease over the economy by saying that's the federal reserve's interest interest rate policies which again get criticized or simply a sign of economic robustness here's what he had to say they were raising interest rates too fast because they think the economy is so good. i think that. they will get it printed i really do mean the fact is that the economy is doing so well that they raised interest rates and that's as a form of safety that would president obama didn't do much of that much easier and when you have no interest rate you had a very low interest rate we have a normalized interest rate normalized interest rate means a lot you know it's good for a lot of people they have money in the bank they get interest on their books for many years nobody got interest on them. donald trump saying ther

we have plans in dipping integration of russia into the global economy deepening treat investment. overall economic relations with a lot of conflicts of course the globe and you have many politicians across the globe who are against this as far as i understand because new sanctions are looming and the old saying actions are being extended you know we look on the situation where we can then make relations with europe for example you will find you know you can look at the political state there's a lot of talks a lot of buzz sanctions. but if you look at the figures you will find out that in the past two years they've treated over between russia and europe was growing double digit twenty three percent last year twenty one percent is what we are witnessing this year the. flows between because this is all sort of running double digit. if you look at the investment you will find out that russia was european guy that is are involved in a number of large skeel medium scale small scale but if you look at the large scale you play in the atomic uclear plants construction in hungary in finland

economy. problemrtainty is the affecting it the most. my view is the uncertainty could continue beyond march 29. leaders capess wait. -- can't wait. what is going on with business investment in the u.k.? >> business investment before the referendum, a bit of slowing because of this uncertainty, that it is an interesting debate. we think of the business community wanting certainty and a smooth transition. that is what business groups have said, the transition, clarity, but as you get the prospect of a second referendum, some is this leaders are asking do i want certainty, but a certain >> it, or more uncertainty and the increased chance of staying in the eu and holding on to those supply chains. it is interesting. we are starting to see a shift in weight businesses are talking about this because of that second referendum possibility. carol: how does a second referendum factor into your perspective? >> it is part of the challenge in making a judgment on the u.k. economy. it is an added uncertain

we think the economy is strong. we are just about at neutral. i understand for the stock investor, you have this drop. for many people, they feel this is a reasonable position. what is your position on this? werelked about how markets pricing in a dovish hike. at most, for 2019. what is it going to take for markets to catch up with the fed? the fed will catch up with reality. we have not seen the impact of the previous rate hikes. sheet, ande balance jay powell has made it clear quantitative tightening will continue into 2019. the copeland of a rate hike. odds of as, the recession have gone up dramatically. i think the fed will adjust to the new situation. the fed is very capable of flipping policy if that is needed. how far do you think this goes in resetting the fed? there has been talk the major central banks around the world o optimistic. >> the major central banks are following the fed. the ecb winding down qe .\ that is happening with a slowing economy. the rate hike with the fed also happening with a slowing economy. slowingng seems to be

economy and the markets? >> well, we think there is this is pretty much a shoot fist and ask questions later kind of market and for us as we look ahead, we have decent gdp growth here and really abroad and really only modest inflation, so i think you know, i thought you guys did a good job talking about what in our opinion was kind of a pr blunder. certainly, as you pointed out, the traeasury secretary probabl has frequent conversations, or you would hope so, with all of these major financial institutions and just to headline that steve liesman pointed out, rather than the strong economy at the top, it was kind of the negative at the top. or what the market ininterpre r ininterpreterininterpreteterpre as negative. it's going to be like in for a while. >> did that clarify things the treasury said it should have been about the economy >> well, you could see when john williams talked to steve last week, you know, he said the right things but obviously, i mean that worked for 20 minutes. now you have the treasury

economies where people's heads above water. and once that stops is that in rome that was the we know rome and when it was the first place that didn't cancel the debts ended up in feudalism so that's the model but i think economic analysis should start with well and so let's just focus in on one specific metric if you well so ancient credit analysis and you were a credit analyst actually in wall street as i started your career you've been looking at credit in the economy and in the in the business world for decades now you make a point there that is one that seems to hinge on this whole story and that is that compound it rate of interest in the debt is grows at a faster rate than the economy can grow at any possible right to pay down that debt you know you know einstein called compound interest the most destructive force in the universe and one of the greatest forces in the universe here's a guy who was associate with the atomic bomb and yet he thought compound interest was was incredibly destructive but when you apply that to d

is it damaging the economy ultimately?the metrics and traditional rhetoric, on both objectives it is doing ok. from a fed point of view, the stock market is quite an important influence on consumption activity. so much of u.s. wealth is held in stocks through individual pension plans. i think the value of the stock market is something the central banks around the world will pay more attention to in 2019. here in asia we have the bank of japan, a very active investor in japanese stocks. the swiss central bank also invest in stocks. the fed right now cannot buy stocks, it is prohibited is constitution. but think all of these things will be watched by policymakers next year. yvonne: you think the fed is this couldndent and be something systemic that would feed into the economy? jim: absolutely. companies will be concerned about how to make those decision. it deteriorating, it and stall those decisions it will impact jobs, construction, and consumption. we talked about animal spirits before. better to spend a billion dollars o

>> it depends on the economy.ounced that they are terminating their quantitative easing program. an interest rate increase for next year, it will depend on the economy. so far we have seen the export sector being a drag on the economy. last week, we had some evidence that this might be filling -- spilling into the domestic economy. we will see how this spells out. nejra: thank you so much. bloomberg, we speak to the governor. don't miss that interview at 11:00 london time. bloomberg markets: the european open is up next. this is bloomberg. ♪ anna: welcome to bloomberg markets, the european open. we are live from our london headquarters alongside matt miller in berlin. matt: stocks tank after investors see the hike is to hawkish. many rushes into treasuries on this thursday, the cash trade is less than 30 minutes away. anna:

a much worse landing for the china's economy than the economy is actually -- the chinese economy thanlated. 7.5% is looking pretty bad, isn't it? >> yesterday in this case, i am in full agreement. you look at the recent activity is saying that we are not yet seen the effects so worst timesr, are ahead. -- worse times are ahead. anchor: -- best it iswith the sending a single -- ace -- i think with the forecast, it is sending a signal. anchor: trade war, what trade war? get rid of those tariffs effectively. >> as i said earlier, it is not about the trade balance. it is about much bigger issues between the u.s. and china and that is not going away anytime soon. we are still facing significant headwinds. the two biggest ones would be the federal reserve and u.s. liquidity. that is going to be a problem with the likes of ruby despite the correction of these currencies. anchor: even with oil prices falling? >> i think it is a relief, but with the likes of india and the balance of payments has more to do with crude oil prices. it is about the electronics deficit as well. it is about a third

economy less than other major economies in the world. to u.s. is insulated from the rest of the world, but the u.s. economy motors on from its own fuel of consumer activity and domestic investment. it is not so heavily influenced by what is going on globally. the kind of repeat the point i made a moment ago, they will be watching for spillover. if they do not see spillover, what is going on globally will just be part of the background that they have to pay attention to. shery: what the market did not like today was not just the rate hike, but the balance sheet rundown being on autopilot. the fed seeming pretty proactive here. is this a good approach to next year when the uncertainties are so high? does the fed need the extra ammunition going into next year? i think that requires a little bit of a new wants to answer.- of a nuanced toating a cushion to react downturn is not a reason to raise rates. clearly, they would not be thinking that we want to raise the policy rates just in order to be able to reduce it. a downturn, sooner or later, will ma

economy is on track to grow. potential while unemployment stays at the lowest since one thousand sixty nine consumption as you mentioned is still a strong this is important since for two thirds of the u.s. g.d.p. incoming economic data do not point to a looming recession that's in the interest rates are these affects the housing market. to see for example also the tax cuts effect it's fading and we don't see any fiscal stimulus on the horizon while we are in the last phases of one of the longest business cycles in the modern history coupled with the trade wars that the government shutdowns changes in the white house fears of a global slowdown and all the geopolitical events a confidence and confidence among investors about especially among consumers he's amassed to keep the economic expansion growing exactly everyone's worried about that long positive cycle being over all coming to an end at some stage what about your own power he doesn't have to worry about his job anymore as head of the fed. he's you know be wo

economy and the outlook.g to ofnk about that tightness financial conditions. they are starting to think about the fed raising rates and what happens when the fed starts to stop and the u.s. growth numbers aren't as good as they were before. romaine: when you're talking to people in this market what comes to the policy communication coming out of washington? it seems like what happened this weekend with his tweet and these phone calls has a little bit more to do with how they are communicating with the market rather than what they are actually doing. sure. i think the danger is being communicated directly to the markets you can't really control the market reaction. you send off a tweet and it is supposed to reassure the equity markets and instead the equity market tanks. romaine: have we had policymakers try to influence the market in this type of way before? >> we have had policymakers talk about market but it's not in this kind of direct unfiltered unmediated way. therefore in this unfiltered unmediated situ

the question was, will it pull down the us economy? we've seen weakness gci’oss us economy?cross europe but the us economy, which has been fired up this year, 396 which has been fired up this year, 3% and forecast of 2.5% next year, is going well but there's indicative signs at the moment the us economy is coming under pressure from the rest of the world. when you say under pressure, does that mean recession in 2020, which is what some are predicting. no, but what we're saying is 2019 and 2020 look more likely to underperform. my suspicion is while he was talking about two rate rises next year, it's going to become more accommodative text year. paul, thanks very much, nice to see you. let's stay in washington, because the city's top prosecutor, the district of columbia attorney general, is suing facebook. karl racine says the social media giant failed to protect the privacy of its users and deceived them about who had access to their data. it's the first major us move to punish facebook over the scandal involving the political consultancy cambridge analytica, which was able