still ahead on this fed-focused edition of "mad money." when the fed makes its move, sell. then the stocks that can actually succeed in a rising rate environment. hallelujah. send your tweets to jim cramer. i'm about to answer your questions. "mad money" will be right back. is that ice-t? nope, it's lemonade. is that ice-t? ice-t? what's with these people, man? lemonade, read the sign. lemonade. read it. ok. delicious. ice-t at a lemonade stand? surprising. what's not surprising? how much money marin saved by switching to geico. yo, ice-t! it's lemonade, man! fifteen minutes could save you fifteen percent or more. wi 80% of recurrent ischemic strokes could be prevented. and i'm doing all i can to help prevent another one. be sure to talk to your doctor before you begin an aspirin regimen. if you take medication, you may sometimes suffer from a dry mouth. that's why there's biotene. and biotene also comes in a handy spray. so you can moisturize your mouth anytime, anywhere. biotene, for people who suffer >>> when this special show about how a stronger economy can have negati

don't fight the fed meant that when the fed was cutting rates, you had a tail rate at your back. as we know from this amazing rate cutting cycle, his wisdom prevailed the whole time. those who doubted the fed's resolve, and there were many, many who thought the fed was just pushing on a string, meaning it couldn't impact the real economy, they ended up being dead wrong. they were run over by the tape, meaning the buyers swarmed in and bought every single dip when the market was going down. every single one. and each time they made money even as it seemed too good to be true. it wasn't. now, when you buy stocks right now and when the fed's raising, what can i say? you are violating -- you're fighting the fed. rates that go up because business activity is good can be a positive for many sectors, but we no longer have the fed wind at our backs, and to nottage that is to be a fool. so here's the bottom line. while i do not expect many of the more disastrous scenarios to pan out, i do know the fed is now the enemy of higher stock price zpz it can be a powerful enemy if it doesn't watc

if i were at the fed, i would be saying what the fed is saying.we don't have a problem here. >> yeah. >> do we want to undermine confidence in our own institution? no. i can tell you from my private conversations, okay, i think the fed is extremely concerned about this. but, and the first fed official who raise ares his hand publicly and says we need to do something about professor scott's book -- [laughter] oh! you want to bail out wall street again. this is toxic. >> it's going to take time. >> it's going to take a lot of time. >> okay. >> i think we have come to our adjournment. i want to give any member of the panel one more minute if you have a parting thought. >> i would just say i'm very intrigued by paul's proposal. i think it's worthy of some additional thought and investigation. one thing, you know, in dealing with the crisis, an issue that was -- that bernanke thinks is one of the most difficult to deal with was stigma, getting banks to borrow. >> right. >> well, that would be one benefit of it, you know? you get around that problem. th

of the misconceptions and misgivings and the fed. i think we ought to and should explore smart reforms that balance maintaining the fed's independence, but it also bolsters public confidence and faith in the fed. we have made some tweaks in dodd/frank. including having the gao stu study -- conduct a study and make recommendations on reform and i think that that's appropriate. i think the gao recommendations are good places to start any conversation on reform. i also signed on to a letter with some of my democratic colleagues encouraging the fed to seek greater diversity and with that, i yield back the balance of my time and i look forward to this hearing. >> gentle lady yields back. thank you. we welcome the chief officer of the bank of kansas city. i know you're coming off busy august with the jackson hole conclave that was put together. and i know that you met with a number of folks that are represented here today in the office. or in the audience. jeffrey lacker president and chief executive director of the bank. and former board

the fed does not want to choke that off.ed gets concerned if businesses want to keep hiring 200,000 workers per month and there are not the workers there for it, what is going to happen is they start bidding and fighting over each other for the remaining workers and that is what causes our inflationary pressure. the question is, how much slack is there? we've never really seen this coming situation before where the slack is coming from people who are not in the labor force. we are not seeing the unemployment rate getting pushed further and further down. are people seeing responding to the increased job growth by entering the labor force. as long as i continues, then the fed once to allow that to continue, but that is a tough call for them in terms of how much farther connect go. how many more people are willing to come into the labor force. nejra: i just want to ask you about wages showing less of a pickup them projected. what does this mean for inflation prospects and also what the fed might do? again, we have seen some pre

for any fed program. now, if this means eligible at the time the fed provides the first lope, it may make it harder to nip it in the bud. you've got to wait until five institutions have a problem. if it means, on the other hand, ever eligible for a loan, then it is not much of a restriction. but under that interpretation be, the first loan could trigger cries of inappropriate behavior or even illegality. third, dodd-frank required that all loans must be collateralized. before it was just to the satisfaction of the fed. and a lendable value was assigned to all collateral. this reined in the fed's authority, among other things, to buy unsecured commercial paper which it did for major nonfinancial issuers in the crisis and more generally discretion on setting -- [inaudible] fourth, the fed can only lend to solvent institutions. again, a requirement not tied to banks, just nonbanks. now, while a solvency requirement is a cardinal principle in the 19th century formulation of the appropriate role of the lender

-- fed rate hike.uld put pressure on the yuan. time, just because they are weakening the yuan, it does not mean that exports will improve that much. it is more about underlying demand. this is more of a global trade story than it is about one china can achieve in boosting their competitiveness with the yuan. until global growth and the global economy starts moldering again, we are not expecting to see a turnaround in the near term. thanks. angie: coming up, a call for calm. china's military backup telling people to ignore rumors that the second warning came. we will have the latest next. ♪ yousef: welcome back. angie: a quick check of the latest is the splash headlines. snapchat is said to have -- business flash headlines. snapchat is said to have chosen bankers as they push ahead with the biggest social media ipo since twitter. the listing may happen as early as march. other lenders from jpmorgan to credit squeeze will be active book runners area the company known as -- book runners. the company known

to understand the fed structure, it's essential to understood the fed's purpose.prior to the founding of the fed, the banking system was often unable to adjust the supply of monetary assets flexibly enough in response to the changing needs of commerce. the fed was founded to furnish an elastic currency, in the words in the preamble to the federal reserve act. clearing houses, bank-owned cooperatives in larger cities played an important role in how periodic crises were resolved before the fed, including the issuance of currency substitutes. but clearing houses were widely viewed as favoring the interests of large banks. reserve banks were modelled after clearing houses, but with note issue powers and universal eligibility for membership the aim being to improve on the role of clearing houses in a way that served broader public interests. a plan for a centralized institution was rejected out of concern about excessive wall street influence at the expense of diverse regional influence. proposals for a government-controlled central bank were rejected as well for fear

will the fed go in december? won,ave dollar korean 11.40. have lost some 6% off the sterling this month and we will keep a close eye on that. we will talk to the ui item club about brexit. first word news with angie lau. angie: thank you both. the uk economy has been more resilient since thought. concern that britain could lose market or evenhe tumble out of the european union without a trade agreement and place has driven the pound to a 31 year low. that means companies are likely to scale back investment in hiring plans. we will be speaking to the co-author of the report, martin beck, at 7:15 on daybreak europe. north american banks cut their share of uk commercial property lending by half. the head of the eu vote. according to a survey, u.s. and canadian lenders market share dropped 7% from 14% for six month of the year, amidst for british real estate. chinese president has warned the global economy is weak and vulnerable to problems that could trigger a new financial crisis. speaking at the summit, he said the underlying causes of the tw

anna: fed up with waiting.: the september minutes show the last months decision to hold rates was as they call it, a close call. several thing that a height is needed relatively soon. brexit's next story is high court challenge. a judge will hear arguments against theresa may's assertion that she does not need parliament's approval to trigger article 50. this is all about the timing of article 50. meanwhile, lawmakers approved the right to examine the negotiating strategy for brexit talks begin. so far, she has not promised to vote, just saying that monetary and will be able to have their say. manus: looking at volatility on dollar sterling, during that debate, when david day was the hard brexiter rhetoric on the floor.that is when the volatility returned to sterling and we saw a drop finally. finally, looking at supermarket operators, narrowly beating sales. they rose by 1.2%.that was in the third quarter . anna: we must turn to the yen. right now, we have this data out of china.throw the risk radar . china's

david: and away from the fed. financial markets have been able to price the potential for growth and inflation in a more in -- efficient way them the -- than the fed can forecast it. tom: i would suggest that the markets are always more efficient than people sitting around the table. janet yellen and the central bankers, that's the question. the linkages are front and center. jonathan: from tom keene, thank you. 7-10 eastern time, watch bloomberg surveillance week days. thank you very much. i got through that without mentioning the boston red sox. david: almost. roger altman is here from ever core to talk about this. welcome back to the program. let's talk about this call from hsbc. what is your initial reaction? >> my reaction is it possible. every time we have seen -- we have expected rates to begin to move up, they have not and every time we thought rates could not get lower, often may have. bet would not be my debt -- and that's the mainstream view but it's possible. because iot be my bet don't personally thin

david: we are going to turn to the fed.eaking at boston at an economics conference. editorjoined by politics mike up in boston and economics reporter. what is she going to say and why? know exactly what she is going to say but my best that best guess is she will try to open a december rate increase. nothing has changed on the economic data. she will want to commit to a rate increase because of they could go wrong between now and december 14. not going to do anything at the november meeting. is we don't want the markets to move, we want the markets to price in a possibility of an increase. >> is it more important you get up to 70? or is it more poor you don't get up to 90? >> you want to keep some option analogy. it doesn't necessarily reflect the sentiment on wall street. will talk to people over wall street and get a real feel for what the sentiment is. they will be looking at the yield curve. >> i love the idea that mario draghi is checking the chart every now and then. my question would be as follows, the politics, quite

your view on the fed?ssociatedview is with that autopilot and i see that a hike is possible in december. probability with most of the mass in that december bucket. jonathan: the fed has been defined by dissent and it seems that governor brainerd is setting the agenda. do they capitulate? we get tothink if september and we are still seeing labor market slack being some signs of firming inflation, there is significant evidence and we could see the doves seeing in favor of a rate increase. we have to look at the minutes from september and there are three who are not in favor of raising this year. alix: the u.s. dollar continues to grind higher. this is jp morgan's real broad effective exchange rate and that has it moving a lot higher, at its highest level since really back in the beginning of february. that tightens financial conditions regardless of a fed rate hike. steven: it has quite a bit of an influence. the fed targets a short-term rate they are interested in the whole suite. it leads to a tightening o

the important thing about a fed meeting is that a move by the fed does not tell you about the next one usually think it is a signal for a series of -- that is why we have that big boom market in 2014. rates should be on the way because going back to 2014, race should be 2.5 in december and they are not going to be. then wait another year? it will be 2.5% in 10 years' time. i'm sorry. we will be lower by the end of next year. 10-year bond yield -- jon: what is the the -- alix: what is the view? when you look at the same inflation expectations, it seems different than in the past. five-year 30, 10, and breakeven rates. right now we are at a five-month high. do you see this rolling over, as not sustainable? steven: you just dropped six months of history, or more. alix: this is five months. steven: if we go back five years, it will be a normal move. four out of five of the spot inflation measures are close to the 2% number. if you look at the forwards, where the market is expecting inflation going close to 2% -- on the basis that it matters, the fed should be tightening. on the basis that

we will turn to former goldman sachs partner peter keir nan and former dallas fed advisory peter boothat's your outlook? >> for the basic challenge you have elevated stock prices and earnings growth that doesn't seem to be measuring up. i don't know how long those two things can be out of balance. you look at it, how you -- how are you going to grow your business at 15% earnings with 1% economic growth and nothing happening in europe? that's the essence of the request he. >> the stock market has leaf dated because of what the fed has done. danielle, the fed which has created this asset prices or stock prices especially they don't seem to be indicating they are going to do anything different in 2017, do they? >> it doesn't seem like it. speaking of leaf dating the fed is highly responsible for leaf dating the bank earnings, if you look into the weeds a little bit it's all the trading revenue surrounding the uncertainty with brexit and with fed speakers go in 18 different directions and that's helped drive a lot of volatility in the bond market and in the stock market and those trading d

out the fed.n focus as mark carney faces questions from lawmakers. what are we expecting? >> we expect a grilling on tuesday, mark carney testifying before the upper house of parliament. you may recall that the brexit vote could have a large impact on the u.k. economy, so the boe cut their key rate, stepped up government buying and corporate bonds. chart thathow you a illustrates how much they are pulling back in terms of gdp growth. the economy has not performed as poorly as some thought it might after that brexit vote, but to a gain ofg 0.3%. it was your .7% in the previous quarter. at 0.3%, that would be less than half of the quarterly average of u.k. gdp numbers over the past four years, so that is definitely a dramatic pullback. we have the federal reserve meeting next week, november 2. we have that boe meeting on november 3, nothing expected. hard brexit could becoming very real. thank you. some other news, hedge funds signaling corn could head for a rebound after trimming back on price to k

the fed is responsible for levitating the bank earnings. the trading revenue surrounding brexit and fed speakers going in 18 different directions. that's helped drive volatility in the trading and stock markets. gary: that's an interesting point. the volatility the fed is helping create helps the banks in terms of their trading values. anthony: it helps hedge funds becauser creating more dispersion. >> brexit was the gift that keeps on giving. because there was so much back and forth. both citi and jpmorgan had good news on the fixed income securities. >> the trading revenue was up 48% over last year. that's a huge number. thank you fed, thank you brexit. gary: nothing is going to happen in november. when they get together in december will they be looking at the bank results to give them an indication as to whether they pull the trigger? >> maybe, that might be something of a stretch. right now it seems like there are quite a few cat fights going on around that big conference table in washington. every single time a fed speaker opens their

the fed passes open market committee.e will get it -- the latest on the thinking and minutes, 2:00 p.m. wall street time today, while investors give a 68% of hike. oil taking a dive in the past hour. a wide discrepancy in output figures. oilill discuss how the cartel is and the credibility of last month passes agreement. are just about 30 minutes into the trading day. let's head straight to abigail to tell us what is going on. basicallye are looking at flat markets. the dow s&p 500 and nasdaq all trading around even ahead of the release of the fomc minutes later today, 2:00 p.m. eastern time. to be chatting water. the declines have taken stocks down to one month lows. we are looking at a five day chart of the s&p 500. we have seen the magnitude of the climb especially yesterday. the question can be whether this area of congestion proves to be a turnaround for the s&p 500, or if it is the policy for another leg lower here we take across opec west -- classes, ave dramatic losses after half billion barrel discrepancy output

the fed and the boj are expected to hold steady. we will also look at policy moves at the bank of england and questions around governor mark carney's future. general election combines with baker hughes creating an industry giant with a broader suite of offerings amid the ongoing slump in crude prices. we are 30 minutes into the u.s. trading day. julie hyman has been keeping an eye on the first 30 minutes of trading. julie: we have a mixed picture. little change overall today. we are seeing more movement in oil price is. .efinitely seeing some movement below $48 a barrel as we are still not seeing any progress at that opec meeting in vienna even though earlier alix steel spoke to the director general of opec some encouraging signs. to tumble.l continue we are also keeping an eye on the dollar today. insumer purchases climbed september by the most in three months. incomes grew. disposable income was little change. we are seeing a divergence. by .2llar is higher percent but we are seeing a two-year basis point decline in the 10-year no

mindthis report put him in of 2013's infamous fed taper tantrum. your article on bloomberg suggested that the purchase of 2017, soarch of perhaps they will, perhaps they will not. word, that suggested the drop in treasury and 2013, big drop. so, the drop in the day come is a totally significant? probably not. but it is a nice skew, causing me to basically reverse duration on long and short. komiletill with us, lena va, g+ economic. it caused bill gross to shorten duration, and his exposure to the european bond market, how would you expect this type of news to play out? we have seen it on the market naturally. lena: this is where bond markets should be shortening duration, across the board. market, ie eurozone think the storyline globally is one of increasing and negative yields qe, with respect to the ecb, one thing i'm worried that minutes will get in trouble, i will never be invited again -- manus: two people on the show. lena: there is a sense the market i think under prices the physical constraints to the qe session. if we look at a strategical

you talk about the fed being the "do no harm" said. -- fed.early they are expensive in the government bond world. if you look at the boj hedging. if you look the ecb, we are confident they are going to extend their program through the end of next year it all of this year.ts -- next all of this suggests -- bhanu: we have michael bell staying with us on countdown. anna: senior figures entries amazed administration tell bloomberg that the government will prioritize -- we get into that discussion. this is bloomberg. ♪ anna: welcome back. a live shot a london. the pounding of the u.s. dollar, 128 point 87, the lowest since july. we saw a great deal of reaction in the markets and the pound to what we heard from the conservative party conference. just how hard or soft will that brexit be? let's get to bloomberg business flash with juliette saly. juliette: anna, thank you. pimco says too many fund managers are getting their hedges wrong and undermining pension returns and many managers are choosing in from currency protection for each asset class whil

the fed should move or if the fed cannot, others will.oth moving the opposite way at the same time is hard without the dollar stopping the process. david: where is the pound male and where is it headed? >> the pound is very cheap according to our models. us these models are telling now is the time when you're supposed to be thinking about recovery in the pound. positioning is stretched short. news flow is not great. this is crunch time. say we are going to get improvement in the headlines weekly -- quickly. we think risk/reward becomes increasingly toward the upside. johnson is worried about cable because you don't get the spot price at the airport. he is told now he could get it at $1.19. david: arbitrage here. daniel, thanks for being here. he is the head of foreign exchange strategy in north america for b.n.p. paribas. coming up, why would at&t be interested in a deal with time warner? we will look at the possible strategy and difficulties. that is next. this is bloomberg. ♪ courtney in the hewlett-packard greenroom. outlook allhis cap

fed officials are making a bet. jobs report center things along of things will decelerate and that will make the december debate a lot more interesting. matt: we get october and that can be the same as what we got for september. >> you just look at the year-over-year. that's why i like to smooth it out. you can see the direction of the .rend this is a key thing to watch. data we are getting already that seasonal hiring is going to pick up. >> we should get a pickup in that and retail numbers. there is a real interesting contrast. the statement and minutes talked about still solid consumer spending. theave not seen that in third quarter. q2 was very robust. retail sales, consumer spending. we are growing at about half that pace in the third quarter, and consumer spending is the primary driver, so it's hard to make the case that gdp is so -- i win consumer spending think there is a broad agreement that december is appropriate for the next rate hike. there is not broad agreement for next year as they continue to debate

giving this to the fed and the fed has been getting conflicting signals to the market.you have to look at the consequences of monetary policy. are front and center, but the unemployment rate has been 4.9% for months. is there a point that the fed will be pressure to act even if inflation has not moved higher? >> yes. look at the participation rate. this notion of how people are coming back to the labor market are not. if you have unemployment coming down because the participation rate is looming, that is a signal to yellen and the others that there is not as much slack in the labor market. jon: what do low rate mean for us? you got the labor market, price stability, and financial stability. here is a quote for ultralow interest rate. it may hurt financial stability by cosan investors to reach for yield. datevidence to data -- to to notable risk to financial stability stemming from ultralow interest rates. with vice chair fisher is looking for. the numbers i look at suggest you have two phenomenons going on -- one, people taking too much risk. he does mention people reac

boston fed 60th annual economic conference. rosengren will speak first, but before that speech other own steve liesman interviews him exclusively at 7:30 a.m. eastern time. don't miss that. rosengren dissented at the september meeting in favor of a hike. it will be interesting to hear from him, particularly before he speaks in boston. fed chair janet yellen speaks at 1:30 p.m. eastern time. her comments will be live on cnbc. >>> switching to the corporate front, an important day for financials. citigroup, jpmorgan, wells fargo and pnc report results before today's opening bell. are you ready? >> i am ready, i think. let's -- >> lots of coffee? >> exactly. let's have a preview of what to expect from the banks. heading into q3 earnings, one key thing is the same as q1 and q2, expectations for the banks are fairly low and could be beaten. but one key thing is different. bank shares have already outperformed in the past quarter, rallying around 10%, despite stocks specific underperformers. three areas to focus on, loan growth. havi

fed is going to do. >> that's right.ing around the front end of the yield curve. but foreign central banks will be crushing volatility and putting downward pressure on long-term yields. >> that impacts the u.s. market. >> absolutely. >> this doubt about what they're doing means that long-term interest rates are rising regardless of what the fed is doing. >> i absolutely agree with you. it does put in questions the sustainability of the rally. >> of the stock rally. >> of the stock market rally. i think we're cautious in the near term. if you look at the big rally since february, one of the reasons was rates were falling and that was going to support the market. then you had all these people dusting off their fed models. and if rates are rising which they have 40 basis points since june, i think that's a big deal. overall credit conditions are pretty weak. and credit markets are tightening. i think that's negative for the markets. >> aaron, am i making too much of this? 1.74 for the 10-year. i mean, it's the high end of t

, the fed minutes as well.he question is where does the dollar index go from here. rishaad: we have the open. let's get david: over to david. i wish i had good news. notd: these three markets opening an ideal conditions. interesting our liquidity conditions in hong kong. a lot of the funding costs come down to where we go from here when it comes to currency. shanghai flat, hang seng lower. the philippines .6% lower. , a fewrom trade data other things that we might actually get. the new credit data could come out as early as today. , sector the afternoon specific, auto sales coming out at 2:00 p.m. local time out of china. let me shift gears abruptly and have a look at the currency. there we go. offshore yuan, the fixing not very interesting. putting me to sleep a little bit. there we go. what is interesting is they seventh straight day of weakness. a lot of this comes down to the u.s. dollar strengthening. 98 now on your dollar index. how long does this last? at some point my feeling is we will start talking ab

has not changed much from the fed minutes. maybe a situation where we say much of do about nothing. not much came out of this as far as markets are concerned. oliver: thank you. matt: more perspective from the latest minutes from the fed. former federal reserve governor himself. he is now a professor booth school of economics and joins us in chicago. thank you for joining us. let me first ask your reaction to i will not say mutiny but definitely a big debate starting to stir in the fed. the chairs that clearly on the dovish side. >> i think it is clear before and a discussion of the minutes that there are a number of people that want to move sooner rather than later. what is very interesting that someone like eric rosengren who was favorably disposed that keeping rates low for a long time is now one of the p dissenting and saying we really do need to move. not only the labor market issues you were discussing, but broader issues on financial stability that eric has raised and i also have concerns about. matt: we don't see a lot

-- peter: the fed tends to not look at the political cycle too much.ould find it hard to believe they would ignore the potential outcome in the election. were we to get a trump presidency, quite like the financial markets, they would decline. i doubt they want to throw a rate hike on what would be a difficult situation. francine: why would we see an emerging market -- >> i think it has to do with rhetoric that trump comes out with trade. apex.will be bad for i think that is the main reason we are scared of a trump presidency. purely on the protectionist rhetoric we are getting. francine: let's say hillary clinton wins and then it is very highly flagged and we have a december rate hike from the fed. what does that mean for markets? is irving priced in? -- is everything priced in? peter: the fed has come from four rate hikes in 2016 to maybe one and maybe one in 2017. the overall path is gradual. that is much better for emerging markets. consequently, what we hear from investors is they are more relaxed about the outlook for yen and investing. francine:

mean the fed can type. this coming up. this is bloomberg. ♪ anna: welcome back. this is bloomberg daybreak europe. futures are pointing higher after we saw that selloff that take the s&p on a downward leg in relation to the fbi revelations on friday. startl be stronger at the of the u.s. pre-trading day. let's get the bloomberg business flash with shery ahn. shery: thank you. sony has cut its full-year profit forecast by 10%. the company's there's operating income will be $2.6 billion in the year ending in march, citing losses in its component business and impairment in his battery unit. -- says net income will probably rise to $3.96 billion in the fiscal year ending in march as demand for diesel and xmp sport-utility vehicles surged in china. buy anze has agreed to retail and five asian companies. they will pay almost $80 million operate iney singapore, hong kong, china, taiwan, and indonesia. a $30 billion deal could combine ge's oil and gas operation with acre hughes. ge will control the new entity which

that is not the fed's official gauge.snt to say that a concern about inflation, you can see it. aher sellers saying quaid minute, look how long those inflation numbers were so low. minute, lookit a how long those inflation numbers were so low. they are worried about financial excesses. are is where the hawks coming from. that chart tells a real good story. yvonne: i think everyone has been looking for december as a rate hike. until your interview with loretta mester's, signaling november. >> i was getting ready for that interview. you have to raise the rate now if the economy remains strong, what about november? if the numbers hold up, she will be voting for in november rate hike -- a november rate hike. takegure they can probably that into consideration as a secondary factor. there is no press conference scheduled for november either. would be fed rather wait another month? the rate hike august for december at 61.2%. just a couple weeks ago, they were backed up to 52%. let us jump back into the bloomberg. a simple chart

and the fed.he chicago fed president charles evans says it may be appropriate for the central bank to raise rates three times by the end of 2017 if the economy continues to grow in mind of his forecast. needs tosays the fed be more clear about the terms of its moves. he also added to the debate for the need of fiscal and monetary policy. >> another offset would be if governments pending responded were strongly than it has in the most recent period than we would not have to do as much. in a world where that is not taking place and monetary policy has to do the lion share, the lower the endpoint for the federal fund rate that means we have less room to cut before we get to zero. manus: this comes as the st. louis fed president says december is the most likely time for a rate increase but added there is quote no urgency in our framework. anna: patrick armstrong is still with us. what are your expectations for what the shape of hikes looks like? three next year. it is quite rare to get a fed official

there's a fed decision depending on the move in the interest rate, there's a 69% chance that the fed raises rates in december. and now we're a week and a day until the election. and there's a new dramatic twist impacting the markets in terms of uncertainty. investors were getting comfortable with the idea that hillary clinton was winning. already you're starting to see the polls unclear whether it's related to the fbi headline, but an fbi news "washington post" poll showed her up 12 points last week now shows her up by 1. >> amazing swing in that sense. if you look at the betting market, it's still very confident on the hillary clinton victory. you go from 5-1 to 2.5-1. the market still has confidence in hillary clinton. >> in earnings, we shouldn't lose sight of the fact that a number of companies are reporting what has been a better earnings season getting out of the slump or the earnings recession to gross in earnings. and we were told here that revenues are looking better as well. we'll be watching the individual sectors, consumer discretionary, staples, top of the list this week

edmund: i think the fed is a little optimistic. the fed our little bit optimistic.ly the market might be a little bit too sanguine. let's say our medium projection is somewhere around 25 basis points every year. , oneate hike in december next year and one in 2018. investors are going into bond proxies. not many rednecks hikes from the fed, does that trade continue? edmund: -- not many rate hikes from the fed, does that trade continue? edmund: when bonds go up and yields go down, utility does pretty well. the utilities have done fantastically well this year. bond yields are rising. i would say that trade has been done. i would argue there is plenty of scoop for real assets. real estate is still an excellent place to be both in the u.s. and europe. secondly, infrastructure, because as we talked to germany, the u.k. as well, there is going to be infrastructure spending, austerity shackles have been thrown off. we need to spend more. infrastructure is not great. look at the trade. anna: and the structure is there. it is may be going to be the buffer for 2017. that is th

anthony: if you look at the fed or the yellen fed, they are more x -- susceptible to global events.did not hike in 2013. that the election could prevent the fed from hiking in december, depending on how markets react to the election result. it's not only the u.s. that has heightened geopolitical risk. we have seen that with the conservative conference. that is putting a huge weight on sterling over the last couple of days. we've seen that continuing today. david: the thickest through-line in the meetings has been a concern about european tanks in italy and germany. how concerned are you about them? anthony: if you see the price section, that's going to be a concern. the price has fallen to the extent it has. ande is a primary mandate financial stability. when you have a big systemically important bank like that, it's something that authorities can't or from politicians to the ecb. they need to make sure the risk doesn't extend further. nejra: i'm going to get to sterling and a second. i have one more question on the dollar. there are some people saying that there is a risk the ecb a

we are splitting hairs at the fed.e would argue that we are of ang over a nth percentage. >> i think that is something that we see globally. monetary policy is to steer the towards theconomy inflation target and a cam be very powerful and has been and in some cases it may be reaching its limits. but there is also a big role to play for governments. the short-term stabilization sense like fiscal expansion or contraction but over the longer term, the structural reforms. we have been talking about this for ages in europe. but they are also necessary in the u.s. fact thatpoint to the the government needs to address this in terms of structural reforms. have elections. hopefully, the next administration will be able to do even more than the previous one. anna: many are asking depending on the results, whether we might actually see a government that is able to act more than this last administration. what would you suggest that they need to do? your colleagues at citigroup suggest that they need to do to improve the prospects?

the fed is being more political than secretary clinton. >> i think what donald is saying about the fed is that we don't understand the fed by design was a nontransparent entity. it was designed to be that way. not aal issue to me is great person like janet yellen political, because she is doing the best she can. the real issue is that the process is not transparent. that makes it difficult for the world to understand where we are going. >> is it political, the federal reserve, where you are considered? >> that's a resounding no. keeping interest rates low is better for the incumbent party, meaning a democrat. that is absolutely not the case. the federal reserve is keeping interest rates low because that is what is needed to support economic growth, create jobs, keep us moving forward. politics adjust -- politics just simply do not play into it. >> josh earnest, the white house spokesperson, has said the assertion that janet yellen is political is prosperous. you actually agree, you think there has been a politicization of the federal reserve. >> i don't think there's any doubt. it's a

san francisco fed john williams, dallas fed president rob kaplan and new york fed president bill dudley. look for results from morgan stanley before the bell. american express and ebay after the close. >> apple is launching a new imac at an event on october 27th, according to re/code. the new models will be on sale in time for the holiday shopping season. updates would be powered by the new sierra operating system, which added some support for the siri voice assistant. we talked about that yesterday. she's needing some work. it needs some work. not really -- >> she's getting there. wouldn't you say? >> no. >> no. >> no. she's -- she's -- >> what has she not done for you lately? >> when i dictate, i say very, very clear -- the third, fourth, fifth time at this point, i'm -- i mean my ps and my cts, the things i'm saying are so clear, anyone could understand it. and she says things. i look and i just end up typing it. she's not even close. >> do you like anyone better? do you like alexis or cortana? alexa. >> i am afraid of alexa even when she's turned off. when i say i made a tee time fo

does the fed do anything in december? >> i would say no. >> they won't move a hair in december if there is disruption. it is not the -- >> why are we discounting november? >> a lame duck meeting. >> why? >> if they want every meeting to be live, they need to call a press conference. >> lindsey, is there any chance november is on the table, if anything, just to prove a point that they are apolitical? >> certainly has said that every meeting is a live meeting, but it is all about the data. not about politics. it is not about the election being six days later. it is not about the outcome of the election or the markets reaction to the election. it is about how the u.s. economy is evolving. we are seeing subpar growth, declining income, declining gains in employment, declining gains in manufacturing, inflation is still sluggishly low. if we're just focused on the data and the fed is apolitical, not focused on politics, focused on the data, there is no reason to raise to november and december. so it doesn't matter about the out