has been arguing the fed would race rate. matter among it fed officials? >> not at all. the fed is not the news here. >> what is the news? >> the news is the job number, is it real or not. we look at what has happened? >> decades working in fixed income, is the news that we are in a great distortion, near negative interest rates, where nobody knows what to do, is it true? >> it is a risk that the issues occurringin japan and throughout the world are having a significant and disproportionate impact. that our economic model has ever full us. tom: can i ask you a dumb question? trade make money when you negative interest rate paper? >> there is no question you can. you can make money in the event that rates will rise. tom: he lights up. that is amazing. >> we like to make money. actually, we have that making german bonds. we actually own them. there have been negative rates and i think it will be a terrible event but in the near term, you see inflation. >> my question then, can you to knock aast enough killed? or any of the other traits that are based on this? >> of course

of the 12 regional fed presidents, tenormin. as you know, congressman and i along with hundred 20 park collects sensual letter a few weeks ago about the lack of diversity among the fed's leadership. i appreciate the response you sent us last week in which you acknowledge that greater diversity can help improve the fed's decision-making and that there still work to be done to improve diversity among the leadership. let me start by asking, does the lack of diversity among the regional fed presidents concern you? >> yes. i believe it is important to have a diverse group of policymakers who can bring different perspectives to bear. i think as you know is the responsibility of the regional banks class. see directors to conduct a search and to identify candidates. the board reviews those candidates and we insist that the search be national and that every attempt be made to identify a diverse pool of candidates. we monitor those searchers while they are ongoing to make sure it's been done. >> but then let me just ask you about the outc

and so she did use the term significant repercussion, and the fed schar prepared to act in -- fed chair is prepared to act with the impacts of brexit. >> and thank you, so much. and now, we are waiting for senator shelby to make his way to a camera. and meanwhile, we have steve weiss, and jon and jim najarian and scott brown, and doc, what are you hearing? there is the s&p 500 up 0.3? >> well, when asked if britain would go to the back of the cue or give all hos pit tall offering to them if they did exit, and she indicated from her side she would favor that. i think that the president would favor that, and i believe that we all would, so i don't think that there is anything real are flame thrower-ish in the speech at all. >> josh, the issue of the brexit is front and center and now it will be until the thursday historic vote, and you could see that the fed chair is going to be asked specifically about it, and what do you make about the response? >> well, yellen is a calming presence generally, and each time we have an e ent where it is binary in nature, and data t attached to it, and th

the fed doesn't know that either. but the possibilities that believe in the markets become totally unhinged from federal reserve reality are severely diminished by the greater --i will givethis you an example, back in the day when i was vice chairman of the fed, and this is when the fed was very quiet and said nothing about its board intentions. i was aggravated that the market 8% the fed rate was going to and most of us inside the building thought it was unlikely %, but weher than 6 said nothing officially to bring the markets expectations down. eventually they did come down %,d the rate topped out at 6 but we let that misconception sit there for months and months. the fed doesn't do that anymore. mike: they give us reasonably explicit guidance. this --sk you both, does forward guidance work at this point? cannotseful if the fed know what happens, and we do not know what is going to happen with all these global developments that keep popping up? alan: i think it is very useful. meanhat does not controlling. the marke

the fed did not do its own study 3. basel it relied on the committee's analysis which included data from only 13 u.s. banks out of the 249 banks that were studied. such an approach is concerning. the fed should perform rigorous analysis not only for each rule but also on a cumulative impact of capital and liquidity regulations. if our banking regulation -- making regulators are unwilling or unable to conduct such analysis we should consider mandating it. european commission analyzed these factors in its ring tory framework. in a recent call for evidence, it selected feedback from the "to evaluate the interaction between financial regulations and ss their cumulative impact." we should expect no less from ssessegular -- and ac there can dilutive impact." -- cumulative impact." >> madam chair, welcome back to the committee. since her last appearance in economy has made only modest gains. inflation remains low. job creation seems to have slowed. economies of trading partners are struggling. uncertainty most notably with the

trading short-term on the fed. common to go long on the fed. nondecision was highly expected. precious metals, gold up after the fed announcement, you, meaning the traders are telling us to do that. gold flirting with 300 bucks, 1300 bucks per troy ounce and the 10-year yield at 3 1/2-year low. fresh low piling into bonds. there is still room in the trade as well. showed you the precious metals, steel stocks, gold stocks soaring today. liz: i'm glad you pointed out the financials, the financials may be higher, they've been down for four days. down year to date significantly. anywhere from 18 to 20%, depending on it, bank of america, citi, goldman sachs. very tough year. the fed facing criticism from a lot of angles. according to morgan stanley, the conditions necessary to support summer hike have faded. we asked has the fed gone fishing? taking the summer off. double line ceo calling this a zombie fed in an interview with reuters, and larry summers, former treasury secretary under president bill clinton says watching the fed over the last year is like watching groundhog day. t

knew the fed started the process of raising rates various fed officials have said that the fed could go cash flow negative in this scenario as capital losses are taken on the portfolio bonds. do you still see this happening? and when might this happen? >> so you're talking a ourt income going negative? >> yes. >> well, it is conceivable in a scenario where growth and inflation really surprise us to the upside. that we would have top raise short-term interest rates so rapidly that the rates we would be paying on reserves would exceed what we are earning on our portfolio. now even then we have about $2 trillion of liabilities, namely currency, on which we pay no interest. so this does require an extreme scenario with very rapid increases in short-term interest rates. so it is conceivable but quite unlikely that it could happen. if it were to happen, we would have an economy that would be doing very well. this is probably an economy that everybody would feel very pleased, was performing well and better than expected. and where monetary policy, you know, our goal is price stability and m

policy independence of the fed. my question really pertains to something that you just closed on. while credit markets as a whole are robust and the facts show that. credit markets are strong for corporate america that that's not true for small and medium size enterprises. the narrative as it has developed is that that is true, and that's a question to you, you seem to believe that it's not. number two, the second part of the narrative is that the reason for that is bank regulation. i'm quote from one wall street research report, new banking regulations have made bank credit more expensive and less available. this affects small firms disproportionately. are we in fact seeing a supply problem in terms of credit to smaller businesses, and there any evidence that this is attributable to in fact new bank regulations? >> well, small businesses often find it more difficult to get access to credit. we know that frequent lly small businesses or startup businesses, the owners will use their credit cards and personal credit w

does the new york fed with the overall fed -- do you feel like you have enough ability to work to increase ever protections? -- cyber protections? janet yellen: we are part of an oversight group that is led by the national bank of belgium. many supervisors from different countries participate in that group. we also participated in that group. swift and the new york fed are working with bangladesh to try to handle that. senator warner: this is going to be an area that will exponentially grow in importance in terms of the fed's internal expertise and ensuring that we are working more closely with the overall banking industry to up their game. i think it's critically important. let me make sure i get to the others. a number of us have talked about how we can generate additional job growth. one of the concerns that i have is that, practically inside the public markets, we have seen an lastous rush over the decade plus, starting in 1990's but really over the last decade and last three years, toward viet-termism in terms of ws in terms of of long-term creation. this is undermining capitalism as

fed today. vix, or fear index, is a way to buy protection against wild swings and volatility of stocks has shot higher. if you look at a chart of visa , you see there are short-term fears out there. >> u.s. equities have been quite resilient. certainly when compared to european equities. that's a question, we'll have to see if that reacts next week as we get closer to that brexit vote. as for summer fears, we'll have another fed meeting in july. nothing is going to happen today. if we just delay a month later, will they, won't they-type questions. >> and the cash-in from the stock exchange from ubs saying it could be an important signal if janet yellen does hint that the july meeting would include a press conference, which it doesn't on the schedule. but if she does signal that perhaps it might that could signal that it's a live meeting inching towards raising rates. either way, the message is going to be key in terms of messaging, how cautious they really is. should be a big trade for the finan

going into the commentary from the fed. and ahead of the fed, it is worth checking on w.a.r. p. i've change this to look at the swaps market to see what they are protecting. we have a 50% chance of an interest increase not until february of next year. checking on the u.s. dollar, we've seen a decline in the dollar going in the same direction as rates. --talked about pound ballot pound volatility because of the impending brexit vote. a jpmorgan index of volatility is that hit highest in four and a half years. w.a.r. p with a twist. let's get a check on bloomberg first word news with mark crumpton in our newsroom. openedillary clinton has up a double-digit lead over donald trump in the race for the white house stop a new bloomberg politics national poll shows mrs. clinton leading mr. trump 49% to 37% over voters. 55% of those surveyed said they could never vote for trump. he does have an edge when it comes to fighting terrorism. voters say he would do a better job. after the polls closed in washington d c in the democratic primary, mrs. clinton met with rival bernie sanders and th

on the market, and shouldn't the fed wait to have additional fed hikes until we see additional growth in the market. >> well, so, the numbers released on the labor market conditions index don't refer to the index, but rather the change, and the move that you have mentioned in that index suggests that the labor market is operating at a good level according to the level of that index which we don't publish, but there is a loss of momentum and that is what the negative numbers show, and we see the same thing in recent job reports thatey are refer to in my testimony. so without a doubt in the last several months a number of metrics suggests a loss of momentum, and not a deterioration in the labor market, but a loss of the momentum in terms of the pace of improvement, and that is an important consideration as i mentioned. we believe it will turn around, and expected to turnaround, but we are taking a cautious approach, and watching carefully to make sure that the expectation is borne out before we proceed to raise interest rates. >> ms. chair, one final point and not a question, but i want

hampton pearson has more on what has changed and what the fed is sayiow >> halfway through 2016, fed chair janet yellen and her monetary advisers are still on hold when it comes to raising key short term interest rates. >> we really need to look at the data and pre specify a timetable. so i'm not comfortable to say it's in the next meeting or two. but it could be. it could be. >> the latest speed bump on the road the interest rate hikes, an anemic may jobs report. part of a mixed economy in the eye of the feds were the pace of job growth has slowed while overall economic activity has picked up due in part to increased spending. >> the market appears to have slowed down. and we need to assure ourselves that the underlying momentum in the economy has not diminished. >> there is also concern about the future of european union if great britain withdraws. the brexit vote is just eight days away. >> it could have consequences in turn for the u.s. economic outlook. it would be a factor in deciding on the appropriate path of policy. >> the vote for today's policy action was unanimous. with t

however my concern is the fed has authority to be involved. do you think the fed has authority to issue as a last resort emergency loans to puerto rican institutions? >> i think our authority is extremely limited and it wouldn't be appropriate for us to give loans to puerto rico. we have very limited authority to buy municipal that in the authority we have if we were to buy, i don't think it will be helpful to puerto rico and beyond that we have no way ability to make emergency loans. we could not use 133 or emergency powers of that type to extend a loan to puerto rico and i don't think it would be inherently a matter for congress and it's not something that is appropriate for the federal reserve. >> thank you madam chair. >> thank you for your service in your insight. i always appreciate it. recently in the national public discourse, there are those who propose reducing the national debt by persuading predators to take a haircut on their investment. in my opinion policies like that would drive our economy off the cliff and endanger working fa

about the fed what -- the fed's credit ability?ontinues to say it. and she has changed a little bit. she was hawkish, then relatively hawkish, now dovish and inclined to move higher over the next six to 12 months. she is being influenced by many of the fed governors, to try to re-normalize interest rates. there is a contingent that believes, and i believed this for two or three years, then negative interest rates and low interest rates are destructive for business models and ultimately for long-term growth here in my don't think the fed really has that in their model making. but ultimately, janet yellen will continue to suggest one or two hikes over the balance of for and perhaps the same 2017. unless we get back to one or 1.5% or 2% normal short-term interest rates. then the many business models and german companies and banks and pension funds, household savers are basically in deep, deep do do. mike: that's a technical term. [laughter] what is your dot plot. with the fed going forward, you suggest maybe july. how quickly do they

up to 12 regional fed presidents, than are men. as you know congressman conyers and the along with 120 of our colleagues sent you a letter a few weeks ago about the lack of diversity among the fed's leadership. i appreciate the response that you sent us last week in which he acknowledged that great diversity can help improve the fed decision-making and that it is to work to be done to improve diversity among the fed leadership. let me start by asking does the lack of diversity among the regional fed presidents concern you've? >> yes. i believe it's important to have a diverse group of policymakers who can bring different perspectives to bear. as you know it's the responsibility of the regional banks class b. and c. directors to conduct a search, and to identify candidates. the board reviews of those candidates and we insist that the search the national and that every attempt be made to identify a diverse pool of candidates. we monitor those searches while there are ongoing to make sure that's been done. >> but then let me just ask

similarly, the fed's feds were dilatory conduct is becoming increasingly opaque and complicated. this is demonstrated by the inherent complexity and overlap in capital and liquidity rules, stress testing and resolution and recovery planning. two weeks ago a ago a panel of experts testified before this committee that complex regulations might actually increase rather than decrease in the banking system. they also criticize the lack of analysis and transparency in the rulemaking process. this is especially true of the rules established by the international committee and imposed by domestic regulators on our institutions. without adequate tailoring. the fed did not even to its own quantitative study as it did madame chair, for wanted to. it instead relied on the basel committee's analysis which included data from only 13 u.s. banks out of the 249 banks that were study. such an approach is concerning. the feds should perform, i believe rigorous analysis, not only for each rule, but also on a cumulative impact on capital and liquidity regulations. if our banking regulation and regulat

the countdown to the fed chair. janet yellen speaking at the bottom of the hour in philadelphia in what is no doubt one of her most anticipated speeches in some time. we will take you there live once it begins. we have a panel of experts with us today. joe terranova is here with stephen weiss, josh brown and pete najarian. stocks are higher ahead of the fed chair's comments. we are watching interest rates, we are watching the dollar today. there is the ten-year note at 1.73%. as you can see, stocks are pretty much at the highs of the day. we will be following the instant reaction in the markets to what the fed chair has to say about the path of interest rates. steve, that's where we begin. does the fed chair come out and definitively kill june? >> i don't think so. they never definitively kill anything or definitively green light anything. but common sense would say that they are going to wait until they see at least another month's numbers because that number was so bad, they can't go at this point. so look, there'

cleveland and dallas, those fed those fed banks report optimism among their constituents that oil and gas prices have bottomed given that of $24 off the lows in january. shery: how does the beige book compared to data seen recently coming out? we had manufacturing data, consumer spending yesterday. the fed think we are doing compared to the actual data? guy: either modest or moderate. they don't like repeating the same word. that has been in the federal reserve's lexicon going on three or four years now. i will choose the consumer portion of gdp as the biggest indicator. we saw a growth rate of 1% in the first quarter, neighborhood of 2% for the second quarter and that is what we can expect for withate or roughly in line trending growth. they grew only slightly -- how worrisome will that be to the federal reserve? on a three-month annualized basis, the core pc is running at a 1.88% rate. is normalizing. 2% is their target. we are drifting towards that. the rebound in energy prices is supportive of that, if nothing else. shery: price pressures depend on wages. what is the beige book sa

i think it's all fed, right? yeah, that's all fed. it's an asset worldwide that people want.s good. and i think rand gold is an amazing gold company. you see that stock go through 100. there were six downgrades where people didn't think gold could rally. doesn't matter. it's a premiere gold company in the world. stock is on fire. >> we'll see you in less than four minutes. >> when we come back, we'll have parting shots from our guest host today. and weep hear from general motors ceo mary barra tomorrow, starting at 6 a.m. eastern time. shipped from here, on this plane flown by this pilot, who owns stock in this company, that builds big things and provides benefits to this woman, with new cabinets. they all have insurance crafted personally for them. not just coverage, craftsmanship. not just insured. chubb insured. when you cook with incredible thingredients...ato. you make incredible meals. fresh ingredients, step-by-step recipies, delivered to your door for less than nine dollars a meal. get your first two meals free at blueapron.com/cook . >>> will we get back ever above 5

is it a sitcom by fed? >> what's a zombie fed? >> alive but not really, not going to do anything. >> they shouldn't do anything. what we have here is a fiscal blockage problem. not a monetary problem. the whole world is enmeshed in stagnation and deflation, there's no reason for raising interest rates. at some point after we get a slashing of corporate taxes and regulations on business, the business side of our economy is dead in the water. dead. >> larry, should they bake out these forecasts that say they're going up? they keep having to go down and down. they've taken out a percentage point in 17, almost .7 of a percentage point. and they talk about not raising at all. >> it hurts their credibility when they have to backtrack. >> i don't disagree. the fed forecast is wrong. the models have been wrong. the ph.d.s have been wrong. they're all wrong. so whatever. i'm just saying they shouldn't, don't promise what you're not going to deliver. economic conditions, steve, you've reported this accurately. economic conditions are lousy

we knew the fed had gone dovish. this is what we're trying to say right now, it constitutes a new era for the fed. the fed doesn't believe fed policy works i think is ludicrous. >> but the data is not about being dovish at all. he would have said, we'll do qe 4. gundlach talked about this today. the fact that money supply and the stock market are going basically one for one. so you see it right there. the fed has stopped increasing money supply, the stock market has gone nowhere. so to me if the fed is going to back off from this, and money supply is going to continue to contract, then you would expect the s&p 500 to contract. that's not dovish to me, that's hawkish. >> one of the arguments i've been trying to make is the fed a has painted themselves into this corner. in many ways i think that's what bullard's statement is sort of backing up. janet yellen, she also talked about deflationary pressure sort of finding their way into the system. one of the other things we talked about for a while. i think the bond market

according to the district bank, the feds expected to set interest on reserves well below the fed's target rate and that is the federal funds rate. had the feds created a quote rate floor it would have complied with the law. section two of the relief act of 2006 explicitly states that quotes might not ought to be the general level of the interest rates. this is above the market rate and not only appears to be going outside of the statutes but may discourage a free flow in an economy that will flourish. this will expand the family sheet to what was not imagined before. the feds balance sheet has grown and it stands at a staggering 4.5 trillion with a t with about 25% of the united states gdp. the average security treasury held by the feds increased by five years to ten years which increases the balance sheet exposure to the dureratiation o list. almost seven years old, the feds colossal balance sheet shows no signs of getting smaller. the policy normalization principle and plans was written but the word principle is nowhere to be found in the plan and the plan mimics the opaque data depende

admits the he also financial market volatility that has made it so far for the fed -- hard for the fed to control the economy and to raise rates is partly a consequence of what she calls accommodated monetary policy. low rates can be self-defeating. they indirectly create a barrier to higher rates. finally, i like to draw your attention to the monetary policy report itself. specifically to the section on financial stability. the fed says, one, stocks are getting expensive on a forward pe basis. they have not adjusted or at least accommodated the recent drop in earnings estimates. there may be a bubble in commercial real estate. number 3 -- the fed is concerned about the amount of leverage in the nonfinancial sector. quality ishat credit starting to deteriorate. it is something we will also be .anting to pay attention to it mark: in the fed meeting last week, chair yellen side of the upcoming u.k. referendum vote on the eu. issue likely to be asked whether further questions on the referendum and its implications on the policy? how: it is hard to know interested senators are in the brexi

steve liesman has the results of the late cnbc fed survey. >> cnbc fed survey shows that wall streets looking for somewhat more of a dovish end. they pushed a whole bunch of things down the road to when i think the fed is going to act to tighten policy. let's also take a look at where they think interest rates will be. 0.7%. and up to 2. 22. finally, they look to settle down at a2.6. we will get another estimate from the fed at the meeting tomorrow at a2:00. now, looking on to where they think the market will be, you can see we recovered where we thought were were going to be b the markets in january and february. at 2149. let's look at the biggest threat of the economy from the panelists here. global weakness down a bit. tied for number one with tax and regulatory policies. that came up a bit. rising interests rates, 25%. protectionist trade policies, 30 we've had that on the list, 13%. finally, this was taken before the terror attack in orlando, 0% with dem terror is the biggest threat to the u.s. economy. that was only up to 3% after the horrific attacks in san bernardino. for cnb

right -- fed hike.mean a one-off devaluation, another one off devaluation like we saw in august is unlikely? arthur: no, i think that is a must certainly not going to occur. i think the people's bank of china realize they made a mistake in august when they made that one time adjustment and they seem pretty committed now to making gradual, incremental changes in a very careful manner because i think they are quite inre of the potential impact global markets that their moves can have. mark: what is your assessment of the chinese economy right now? many may say the data is .ackluster, stabilized at best how do you use the economy when you look at the data and what is happening on the ground? arthur: i think there are two big features. one is that the government clearly in the first quarter of this year intervened with some credit and infrastructure stimulus with an eye to stabilizing growth. my view is that they are probably going to keep up some form of stimulus for the next several quarters because they

jobs number is so low, the fed has to take a pause. ♪ . .: mark, you brought the london weather here to new york. it is awful and gloomy. mark: it's all that bragging betty, 80 degrees you were telling me earlier this week. you were rubbing it in. there you go. this isis is -- betty: also how people in the markets might feel after the dismal jobs report. mark: it's a bit foggy. let's check in with bloomberg first word news, ramy inocencio has more from the newsroom. ramy: donald trump is still trying to make nice with the republican establishment, aided by steve wynn. he broken a meeting between donald trump and a gop strategist karl rove in new york. the paper cites to people familiar with the details. meanwhile, trunk claims -- donald trump claims there is an absolute conflict, because the judges of mexican heritage. he tells the "wall street journal," says the judge has an inherent conflict of interest because he is building a wall. that's a reference to his claims to build a wall in the mexico border. cruise continue to search -- crews c

the fed has a tough job. francine: is at the fed? or the ecb?rence: no one wants to start from here. where the policy mistake was made, perhaps it was in 2000. question that the markets care about. why risk is so low is because markets are is beginning to doubt -- are beginning to doubt anything the central banks can do. problem. really big maybe it is not a question of avoiding making mistakes. maybe the answer is that every lever they push doesn't work. francine: deutsche bank is saying this is a mistake and because they don't have anything to work on, they should stop, because it therefore it would push policymakers into action. push politicians into action. is there any truth? simon: you tried but it is a pretty big risk. if you look the fed, it is the only bank that is raised and not get pulled back. they raise and then they cut back on the options and then not done so. options. they had not done so. they raise rates and hope to something would happen. [indiscernible] laurence: the fact that you hear so much talk on helicopter money . the f

the fed does want to raise rates. we've heard from a couple members of the fed over the weekend. morning, saying they still believe a couple rate increases are appropriate in a gradual way. is question for the fed whether they think it was a bit of a blip in the numbers or whether this is some new trend for the u.s. economy, slowing down and taking rate hikes off the table. francine: michael, where does the jobs report leaves the hawkish members of the fed? >> they are still out there. just a few minutes ago saying it would still be appropriate to raise rates. they have to make the case that it is a blip and they can point to the fact that wages went up and hours worked did not go down. maybe there is an anomaly in the numbers. francine: michael, thank you so much. michael mckee, our u.s. economics editor live from new york. we will bring you full coverage. you can see the event on the bloomberg with analysis. stay with bloomberg. "surveillance" is next. tom keene joins me from new york. we will bring you an exclusive interview with former nigerian president goodluck jonathan. th

traders rethink the fed's next move. betty: the retailers making big changes to take -- stay competitive. we are one hour from the close of trading. happy friday. off oure coming back lows. this is pretty perplexing but interesting to see what the causes are. the dow is down only .01 of 1%. a have been down as much as 150 points. we are down by money five points. the s&p 500 is down point two and the nasdaq is down the most by point five of 1%. this is coming after the fallout from the jobs report that we saw earlier today. monthly jobs was the worst in september of 2010 and we see that impact here. -- we're still on track to break that. we will take a look at what is happening with the s&p sectors. the 10 sectors right here. we can see the come back with the green versus the red. at one point we had seen utilities and materials in the green. utilities are up i'd nearly 2%, .7 percent. -- financials still the biggest laggards, down by 1.3% followed by consumer discretionary. let's take a look at where those stand. the as

the rationale is it delays the fed hike. if it delays a hike because the economy is fundamentally weaker, how is that a positive for emerging markets that need a robust u.s. to absorb their exports? mohamed: it's the same reason that stocks have fallen and come back. is goods the bad news news, if you are worried about global liquidity. the argument in emerging markets ed rate all make a f hike less likely, therefore, we should worry less about liquidity. therefore, stocks could do better. but i am with you, scarlet and it is about fundamentals. also, there are three different interpretations of the report. one is it is about weak demand and the fed will not hike. the second is, no, this have to do with the supply side. we may be in a situation where we are at all employment -- and that is completely different for the fed in terms of policy locations. the third is this is simply an outlier. there are three different interpretations, which is why the direction of the move makes sense in fixed income, but the scale of the move

and adobe and fed ex tonight to talk about. >> yes.hen fed ex tonight and don't forget we're going to look into these twitter -- i tell you, we're all so jaded. twitter makes major changes like, what a bunch of jokers. meanwhile we're like doing it, 140 -- the video i'm going to put out tonight. >> "mad money" 6:00 p.m. eastern. when we come back, the fed chair on capitol hill. don't go away. every day you read headlines about businesses being hacked and intellectual property being stolen. that is cyber-crime. and it affects each and every one of us. microsoft created the digital crimes unit to fight cyber-crime. we use the microsoft cloud to visualize information so we can track down the criminals. when it comes to the cloud, trust and security are paramount. we're building what we learn back into the cloud to make people and organizations safer. ♪ >>> good tuesday morning. welcome back to "squawk on the street." i'm carl quintanilla with simon hobbs and david faber at the new york stock exchange. a day chock full of news. yellen on t

. >> let's begin with the fed. there's zero perfect unlike liehood of a fed increase today. let's go to carl. he is chief bloomberg economist. what are we expecting this afternoon? >> if we can mix british politics and fed policy together, we can invoke the quotation from margaret thatcher, the lady is not returning. it will apply to janet yellen's approach in the press conference today as well. she's going to play a cool hand. she won't specifically cite him but it could come up in the press conference, particularly during the q&a. the fed is very much aware of international risks and how this is playing into their policy strategy. however, i would say more important is the -- much more important is the domestic outlook. so she will not be returning because she's going to be somewhat dismissive of the wobble in the labor market as of may and i think she will hold on to the notion that the fed could raise rates multiple times this year. mid year language likely has to change and she gave a hint of that in her last public remarks where she said rate increase could be appropri

the fed is data-driven. that fed that's most important will be inflation and jobs data and market levels. they want to see markets less volatile. our markets really the dog? is aat list of jobs data long and difficult list to get everything into the perfect position to justify an interest rate hike. the fed have managed to get themselves into a difficult position. every time they do the markets kickoff. we are not quite there yet. we will speak to the ceo of shell who will give us details on his first strategy update. ♪ to "on theback move." i am matt miller. if we were data dependent on the weather, we would definitely be raising rates. yet another gorgeous day here on -- is it the capital of the continent? i don't know. >> let's look at samsung first. the company considering introducing to smartphone models that will feature bendable screens. this is according to people familiar with the matter. the light imaging diodes could be unveiled as early as next year which will likely give it a head start on new a

mat to defend the fed against the ideas that would damage the monetary policy independence of the fed question pertains to something you just closed on. there is a narrative developing that while credit markets are as a whole robust, and the facts show that, credit markets are strong for corporate america, but that's not true for strong and medium-sized enterprises. and the narrative as it has developed is that that is true. and that's a question to you. you seem to believe that it's not. number two, the second part of the narrative is the reason for that is bank regulation. this report says new banking regulations have made bank credit more expensive and less available. this affect small firms disproportionately. so my question is, are we in seeing a supply problem in terms of credit to smaller businesses and is there any evidence that that is attributable to new bank regulations? small businesses often find it more difficult to get access to credit. frequently small businesses or startup businesses, the owners will use their credit cards and personal credit worthiness in order to ta

it was clear before the fed hikes again the fed chair wants more certainty that her forecast rebounds the right one. >> don't move, steve. we have two other columnist wez wa -- economists we want to bring on. bob, let me start with you. you agree with everything steve said? he is guessing that yell en is saying no rate hike in june or july. >> i think steve got it right. >> write that down. >> go home now. >> thanks for coming on, bab. >> i think that yellen basic sli trying to keep the ball in the middle of the fairway and keep options open. she has a froth i'll coalition on this policy statement. it held together with, you know, staples and chewing gum and she's got to be careful. she doesn't have anybody bounce off. they're going to have a lot of thin tez next meeting. she has to keep the ball in the middle of the fairway. >> you like to think of the fed doing things impeesempirically. you have the dovish wing, hawkish wing and centrists. one thing that led the market to think that there was a rate hike is the centristed moved towards june. she really had to keep the coalition tog

does the fed need to start considering a fed cut?debate can change. ♪ jonathan: this is "bloomberg ." let's get a check on the markets. futures are soft, l future is down about .5%. about 1.4 losses down percentage points on the ftse. switch up the board quickly, i will whip through the other asset classes. 1.57% is the yield on a u.s. 10 year. down by about one basis point at the moment. the data comes in. initial jobless claims spike more than expected. 277,000. 264,000ious reading was . month on month, 0.2%. the previous reading was 0.4%. food,g that, excluding year on year, 1% -- just a touch below the survey at 1.1%. in onnd energy come estimate. a previous reading of 2.1%. no terrific disappointments or surprises with the exception of the initial jobless claims creeping higher to 277,000. they are coming off some very .ow yields at the front-end let's switch up the board and get to other asset classes. futures are soft in the united states. the dollar index has climbed a bit higher about .4%. let's get an immediate reaction

similarly, the fed's feds were dilatory conduct is becoming increasingly opaque and complicated. this is demonstrated by the inherent complexity and overlap in capital and liquidity rules, stress testing and resolution and recovery planning. two weeks ago a ago a panel of experts testified before this committee that complex regulations might actually increase rather than decrease in the banking system. they also criticize the lack of analysis and transparency in the rulemaking process. this is especially true of the rules established by the international committee and imposed by domestic regulators on our institutions. without adequate tailoring. the fed did not even to its own quantitative study as it did madame chair, for wanted to. it instead relied on the basel committee's analysis which included data from only 13 u.s. banks out of the 249 banks that were study. such an approach is concerning. the feds should perform, i believe rigorous analysis, not only for each rule, but also on a cumulative impact on capital and liquidity regulations. if our banking regulation and regulat

they seem erratic but i'm not a critic of the fed. i think the fed is trying it do it right. i think yellen will do it right today. >> gundlach, series of slide decks. he says central banks of losing control and they don't know what to do. every other week the feds message is different. they've turned into the zombie fed. >> that is strong stuff. i do think that there is, as i've been saying, if he is referring to the fact that the line coaches and the head coaches are in disagreement and the defensive back coach is contradicting the -- these are just examples, i agree with him. the losing control stuff, my problem with all of that, gundlach has taken on a high profile role. he should choose his words carefully. you don't want to choose your words carefully when you're just kind of, you don't realize you're on strike. so i think jeff gundlach who i respect has to say you know what? i have to adopt a different or diplomatic attitude. maybe i should be saying i don't think that they are -- maybe they're ill-advised. you switch to terminology so you don't feel like the reaction

is trapped, the fed is trapped. >> and here we are with most of the focus on the fed, and almost everyonversation that we have had, but there is less than a week to go whether great britain is going to vote to leave the eurozone, the so-called brexit vote. and so wilfred frost is here to tell us why it matters so much to the american companies? >> well, the opposition jeremy corbyn and prime minister david cameron went to birstall for mourning mp jo cox. and they have recalled the pa parliament to come back into session monday. and so this brexit is making it very hard for it to come back to campaigning, because the vote remains thursday, but whatever the motivations of the murder of jo cox, the markets have bounced in the last 24 hours, and albeit in a better fashion than the odds might have suggested. the poll on 48% leave to 43% remain, and there is other polls that suggest 66% remain. so what does it mean for the uk's economy? earlier christine lagarde told cnbc the following. sounds like we have lost that the bite. but christine lagarde saying that it would have a big impact on th

that is ahead of the fed decision later today.he nasdaq today is one of the best percentage performers -- bed bath & beyond. this is after news that they are buying an e-commerce site specializing in furniture and home to core. and analyst says this is a relatively small acquisition and is unlikely to move the needle but it could help boost the company's e-commerce. others. pressure so this is not a large acquisition. but investors seem to like the news. vonnie: it is fascinating. at one point, one kings lane was a multibillion dollar company. we areatching -- watching it get acquired for almost nothing. so there is a winner but there are any other stocks you want to mention? abigail: one standout drag trading lower is cisco systems. downgraded shares from a neutral to a by saying that the celebrating earnings growth and also slowing stock buybacks are less of a reason to be positive. todid cut the price target $35 but even so, this is just more of a 10% upside and it is above the average price target of less than $31. odd nuances

the fed doesn't have a crystal ball.ving up trying to say well we know what is going to happen. this is the projection. they are like the rest of us, followed -- rest of us, fumbling around in the dark. anna: stephen, thank you very much. that is it for "countdown." we leave you with the "on the move." until 30 minutes to go european equity markets open up for wednesday's trading. you can see a bounce at the start of the european equity day. see you tomorrow. ♪ guy: welcome to on the move. we are counting you down to the european open. i am guy johnson alongside matt miller. he is over in germany. here is what we are watching. rattled by the polls, george osborne will warn that brexit will mean higher taxes unless governments -- and less government spending. we speak to john redwood. not this time. china's domestic shares are denied access to the benchmark for a third time. is this more symbolic than significant?

officialsay, fed expected to rate hikes, now only .ne rate hike good th the fed is simply catching upo the market. there is a mixed picture of the u.s. economy, downgrade of the improvement, saying has slowed, with an upgrade in economic activity. want to get to our deep dive and take a look at those dots. that is where the action was today. there are a couple of things that stood out. first of all, that green rectangle is expectation for 2016. there are six folks who see only one rate hike this year from the fed. look at this red rectangle in 2017 and 2018, some fomc members that do not see any further hikes be on the one this year for the next two years. this is the revenge of the outlier.. dot. also need to look at world interest rate of ability -- interest rate probability. odds versusx .5% 16% yesterday, quite a change there. 21% from 30% yesterday. if you look out, there is nothing above 50% at any point on this calendar, where as yesterday, 50 percent odds as february 2017 so the expectations for a rate increase have gone down, down, down. joe: those hawkish april minute seem l

phil lebeau in chicago. >>> a lackluster outlook from fed ex. the package delivery company said it will spend more this year to keep up with higher volume from online shopping. for the quarter the company reported earnings of 3.30 a share, 2 cents better than estimates. revenue of $13 billion also topped expectations. and were 7% higher than a year ago. the stock dipped initially following resuls. susan lee has more on fed ex quarterly results. >> reporter: a strong quarter for federal express on the top and bottom lines. pretty good numbers. off another important metric analysts were looking for, forward earnings guidance, which was in line with market estimates. fed ex is often seen as a gauge and bell weather to see how global trade is doing. making more money than anticipated is a positive. fuel costs were looked at given the jump in oil prices to $50 a barrel. for the transport company, fuel is a big expense. for the recent quarter, it looks like fuel had a positive net impact. one disappointing part of this report card was a lack of clarit

so we can talk fed policy, as if we are indeed fed members. i'll let you be from -- i don't know, some west coast man and i'll be a philly thing. when it clears, we can go back to clorox and back to -- look at procter & gamble after these problems. >> living on clorox doesn't sound like much fund. >> good yield. clorox is very popular again. kills germs. i always like to reduce things to the stocks that people have in their house, in their pantry, in their refrigerator, in their drawers because these are the companies that can make you money in that environment because they do not need growth. they do have dividend growth. they are the companies you can look at. edgar allen poe is right, they're right in our face and they work in this environment. i don't want people to give up, i want people to refocus and recognize we don't have our wind at our back with the economy, which means we have to switch direction and look inside our kitchen and look inside our bath. >> doj and doe, brexit has frozen everybody. sterling likely to depreciate further,

steve liesman has more now on the fed chair's workout. >> reporter: fed chair janet yellen said in a major speech the fed remains on track to raise interest rates. but reacting to friday's dismal jobs report declined to say when that rate hike might come. >> if incoming data are consistent with labor market conditions strengthen and inflation making progress toward our 2% objective, as i expect, further gradual increases in the federal funds rate are likely to be appropriate and most conducive to meeting and maintaining those objectives. >> two weeks ago, yellen said a rate hike could be appropriate "in coming months," a phrase she pointedly omitted this time. she called the friday jobs report disappointing and said the recent jobs slowdown "bears close watching." she noted strong payroll gains over the past several years and said she expects the economy to pick up from a weak first quarter. yellen sunday she expects inflation to move towards the fed's 2% target as the effects of the strong dollar and low oil prices wane. yellen said the economic outlook is highly uncertain. accordin

the smb is watching the fed very closely.ould be ramifications for them and for the japanese. if it pushes the yen up, there certainly fallout throughout the central bank community. and there could be a fallout for the u.k. voter consumer population if there is a brexit vote. osborne,ed to george the synthesis they more scarce stories. guest: i think they would and they have. conservative mp said they would vote against what they call a punishment budget. george osborne saying it's not about his clinical career, it's about the question for britain, but they seem to be doubling down. george osborne aligning himself with his predecessor and one-time rival, talking about tax hikes in spending cuts. i'm looking at reserves around the world and danish reserves, if you take a dive into my terminal, we are at this level here. where would be in trouble in terms of reserves were their currencies to get stronger due to brexit? >> the central bank has unlimited firepower if it wants to direct it toward the currency, which is what they h

comesct is, when the day for the fed to raise rates, the headlines will say fed confident enough about the economy to raise rates. defers, the headlines are all global economy can't withstand fed tightening. reinhart, head of the monetary affairs portion at the fed for a long time and famed economist. thank you for joining us. david: breaking news crossing the terminal -- the latest wrinkle in the ongoing story about viacom. its stock climbing as much as or .5% with reuters reporting the ceo ousted from the board. we are seeing the stock climbing here as much as 4.5%. vonnie: coming up in the next 20 minutes, ford's cash cow pickup could be running into some trouble with regulators and it could be costly afford. that story is next. ♪ vonnie: this is a bloomberg markets. david: let's take a quick check of the major indexes. all of them in the green. the s&p 500 up about .1%. the dow up .4%. time for the latest bloomberg business flash. has acquired ack stake in a wind farm unit of general election -- general electric. terms of the deal were not disclosed. the wind farm was completed in

and speaking of the fed, the chicago fed president charles evans tells cnbc there could be two rate hikes this year, but timing is not really that critical. >> two rate hikes in 2016, that's my own call for that, if the data continues to be in line with my outlook. that's a slow and gradual increase this year. >> and accor. >>> good morning, everybody. i know you wanted the eurozone pmi data, may final composite 53.1, we're a little bit higher than the flash estimate. the april final figure, 53, so, again, the may final composite pmi a little higher than both of those. output prices for pmi 49.3. that is also a bit higher than what we saw in april. the final services pmi 53.3, which is also a bit higher than april. and the services input prices, 55.6, slightly in line with what the flash figure was, 55.5. so the eurozone business growth remains modest during the month of may is the takeaway. the pmi, though, showing that we are seeing modest growth, though, across the board for the composite figures. the euro dollar pretty flat though, 111.53 on the back of the ecb's rate decision and the