new members on the fed. lot of deep regularization will be personnel based. he is very in favor of deregulation. he will have the critical position. the fed already said they want to ease up on banks. how do they back off and do a private -- do they pivot? scarlet: we will look ahead to that. let us continue. i want to get back to michael relatively,ok at a that seems to be the key word. scarlet: janice henderson. tom: janice henderson will join us. excuse me, that was like 3:00 a.m. this is bloomberg. ♪ scarlet: i'm scarlet fu here with tom keene and michael mckee and washington. mike, taken away. dianei've a question for swonk. the markets but that in of the placeholder. my question is, will the economy ofevolve? that is,n i ask despite what president trump said, automotive industry jobs or right now, not increase in. piercing housing fallout. are we going to see continued hiring or not? thinkiane: -- diane: we will continue hiring. it is getting dicier. what people are forgetting is the speed limits on gr

fed chair yellen? mike: i don't think he could be. janet yellen has been about the most dovish fed chair you can imagine. low for aates fo very long time. applicant is argued we would have an outburst of inflation from the fed's unintuitive using. she kept rates lower longer arguing they would bring more people into the labor force if you could keep rates down and inflation would not go up. vonnie: michael mckee, thank you. we will return to you a little later on. the chairman is speaking at this minute. >> i now recognize myself for three minutes to give an opening statement. since we last convened to take chair yellen's testimony on minute trade policy come been encouraging economic headlines. confidence is up and headline unemployment remains low, as does inflation. the headline on up limit rate still rests too much on incredibly low labor participation rate and regrettably high disability payment participation rate. paychecks and savings for working americans still have considerable room to grow af

n, are wet a coh seeing a rules-based fed or still a dovish fed?oshua feinman: i think it is rules versus discretion and i agree, absolutely that we will go to the mat with discretion, for sure >>. every cycle is different. >> you have to have that human element. joshua feinman: and to say that there is uncertainty about it but there is uncertainty about the economy and how it will involve so you never remove that completely. instead of being incredibly transparent in telling us what we intend to do, the economy does not always cooperate. but i don't think that is a lack of transparency. david: nobody likes a boss even if it is a rule. thanks to carl riccadonna of bloomberg intelligence, neil dwane of allianz global investors and josh kleiman -- josh feynman of the lesson investment. report toal monetary congress. we will be joined by republican congress and french hill, one of the people who will be asking chair yellen the questions. next, we had out to sun valley where leaders and finance and politics join for the annual conference. for all of ou

decrease the fed fund rate. but normalization would also entail moving back to the conventional open market operations. let me finally in my limited time left talk to you a little bit about the limits of monetary policy. of course we know we have been struggling overall with slow growth and low labor participation even though unemployment has come down. you talk a lot about substandard productivity. what many employers say to me is they simply can't compete with the government for labor and that the government is paying people to not work. as you know we're in the middle of this big debate in washington about obamacare and whether or not we should reform medicaid. here's what alan greenspan who calls you first rate economist said. quote urgs can't get growth going so long as entitlement expansion is anywhere near where it's been recently. it's eating up the sources of investment and the sources of growth. you can't have it both ways. you cannot fund all of the entitlements everybody wants and expect that you're

that's what the fed calls them. one box was have the gains of the economic expansion been widely shared? box number 2, homeownership by race, et tisty and box 3 does education determine who climbs the economic ladder? and in that discussion of those problems, you highlighted and included socioeconomic differences between whites and blacks, poor credit scores due to income disparities, and continued discrimination. that lays it bare. so, chair yellen, let me just ask you, of all of these factors in your boxes, which of these factors is most pressing and what recommendations ob substantive solutions can we, in congress, work on to help address the home ownership problem hurting african-americans, much as you suggested that we develop this legislation that's moving forward on the unemployment of african-americans? >> well, i don't want to try to give you detailed suggestions for, um, what legislation you can put forward. our job is to try to do the best we can to provide information and background that will be helpful

subadra: um, the fed. >> fed. james: bank of england. jonathan: that is it for us.rk, this is "bloomberg real yield." ♪ ♪ ♪ david: are there many who said, i want to be the leading cellist in the world? yo-yo: in music there is no such thing as this is the greatest anything because it is about learning forever. david: what about where you play? yo-yo: you don't have to be there. i don't have to be there. but if we are going to spend time together, let's make it count. >> would you fix your tie, please? david: well, people wouldn't recognize me if my tie was fixed. let's leave it this way. alright. ♪

how about the fed? members who are sitting in board meetings, are they potentially criminally or civilly liable for the decisions they push a board to make chair yellen: not to the best of my knowledge? rep. duffy: mine either. that is concerning. i'm pushing on this because you have supervisory role, and about you to do a good job, but from the feedback we get, the involvement of the fed in corporate boardrooms, it has far surpassed, i think, the vision any of us had in this room. and it concerns us. chair yellen: let me say that we have talked to many corporate board members, and understand that there has been an accumulation of a large number boardms we have indicated members along with senior management should be responsible for. rep. duffy: i don't believe you have the authority -- chair yellen: we should clarify -- rep. duffy: the authority to make decisions. that is the feedback we have made. you one mustk question, do you anticipate this will be your last time testifying before this committee? c

the fed says that will resume. they find equities a bit stretched as investor risk appetite grows but don't see evidence of increased leverage that would suggest there any bubbles forming, at least dangerously so. more interestingly, detailed topics, low productivity growth, corporate bond market liquidity and monetary policy rules. the fed does not have a good answer for war productivity has been so low which they say suggests the reason we are seem tepid wage gains. it could be a pause or reduced corporate r&d spending during the great recession. the fed does not know if this is a new normal. liquidity,orate bond the fed acknowledges new regulations have caused due to pull back on inventories but they say any liquidity pressures have been minimal and offset by the fact that financial institutions have stronger balance sheets now. finally, the current fed pushes back against the idea of using monetary policy rules. several of the reported trump's nominees to come have expressed support for using policy rules to ma

we will get a new fed chief.y may be more of the same of what we have, or maybe somebody intent on hitting the trump growth agenda. i think the long rates is at or a little bit above fair value in the u.s. i think the spread have a ways to go. returns will be good. i think the risk is on the equity side, it is at the bottom of the capital structure and higher risk bonds if you get a hawkish fed. jonathan: that's what i found interesting about this week -- the federal reserve worried about risk and high risk tolerance, yet the focus of the market was on the risk-free assets. make sense of that for me. is it the risk with the risk-free asset or where it usually is? oksana: making the risk-free assets more risky for that reason. we have talked about that, the idea to redefine what risk means. when we talk about bonds and the potential for return, let's not forget that they are already priced for perfection. you have to have a continued influx of pretty bad news for bonds to continue the continue, traditional, sovere

the fed is contemplating reducing it. they will reduce their purchases but it doesn't mean the balance sheet will shrink anytime soon. maria: he said rates are negative but the european national bank things are getting better. jim: they are having suppressed rates and the president and ceo of deutsch bank was on tape saying all this bond buying by the european central bank without regard to price or value has served to destroy the method of price discovery by which we decide to price credit. that is soft spoken, but very eloquent and powerful denuns was. when a banker can't price credit. interest rates are the most sensitive prices in capitalism. they design risk and cash flows, and the central banks have with malice aforethought and intended benevolence aforethought muscles around these prices for 10 years and you can't tell me there is no consequence for that. maria: i want your take on whether janet yellen gets a next term. her term is up in february. and we have to talk about fiscal policy with the markets expecting h

louis fed. i'm sure you are familiar with it it was june 17th and it clearly shows that what i heard you say are the disappointing levels of participation that are unavoidable because of an aging demographic. and i wish i had the chart that i was able to put up, but it seems to me, what is most concerning is the drop in participation really comes from youngest americans and, in fact, that chart again released by the fed of st. louis, shows the highest levels we have seen since the 1960s for americans age 55 and older and it seems to me this argument that our economy hasn't responded the way that it has, you -- we talked about this the last time you were here. and i think i labeled it flim-flam, not in a disrespectful way, but it was clearly not what some of those statistics are showing what i want to talk about, though, quickly, is that during your semiannual testimony before this committee in 2015, you were asked about concerns regarding a lack of liquidity and certain fixed income markets and

louis fed. was june 17th and it clearly shows that what i heard you say is disappointing levels of labor force participation are unavoidable because of aging demographics. i wish i had the chart i put up. me what is most concerning is the drop of participation comes from the youngest americans. that chart released by the fed of st. louis shows the highest levels we have seen since the 1960's for americans aged 55 and older. it seems to me the argument that our economy has not responded the way it has, we talked about this last time you were here. i think i labeled it one flam not one these statistics -- what the statistics are showing. your semiannual testimony before this committee in 2015, you were asked about concerns about a lack of liquidity and certain fixed income markets and you said that is not clear what it has happened to the market and what is causing what. you continue that, we do not see a problem, you said, but something you needed to study further. has there been additional study

yellen discussed the possibility that a recent slowdown in inflation could persist longer than the fed expects that triggered a big market rally with the dow jones industrial average hitting a record high investors saw the remarks as a signal that the fed which has raised interest rates three times since december might slow the pace of future interest rate increases today's testimony coupled with upbeat data and earnings report to do with the end of the week meant world shares hit a fourth all time high in less than thirty days. beijing and lisbon are set. joining forces in canada's belt and road initiative the global infrastructure project was launched in twenty thirty by chinese president xi jinping if successful it will link asia africa and europe by land and sea thereby linking them by money and leverage now portugal has entered the fray bringing the advantage of its geographic location the initiative is part of it's got two components the silk road economic belt and the twenty first century maritime silk road they will cover dozens of countries more than sixty percent of the world

let me move on quickly to the issue of and fed's use of fed reserve as a monetary policy opportunityying banks 1 1/4 on their bat if they tlol through with their plans, they'll be paying higher interest rates sometime later this year. that provide banks with government subsidy to not lend out their reserve. does the fed pass these on knowing they're being passed on higher interest rates to customers and customer deposits? >> my question is on larger deposited, we're beginning to see upward movement in rates available to customers but not on retail deposit accounts my expectation taegs is although there will be a lag that competition among banking organizations will begin to put some upward pressure on those rates and. >> and yet we looked at what some of the big banks pay on customer deposits one basis point for many of them, multiple institutions paying only one basis point on customer deposits and the fed is paying 125 basis points so it doesn't appear as though in of this pass through is happening to customer account and that might compel the fed to reconsider the merits of its po

of euro pacific capital peter thanks for joining us today look the fed just released its plan for the next few months and there was of course some things that many people are predicting one of them is that the interest rates were not going to rise not going to change what kind of impact do you think we can expect from this sort of announcement. well no impact i mean pretty much everybody knew the fed was not going to surprise the markets and hike rates this meeting although they did indicate that they would begin to shrink their balance sheet relatively soon but by relatively soon they may mean they may mean never because you know shrinking the balance sheet is a lot harder than expanding it you know quantitative easing was the fun part quantitative tightening is not only the hard part it's really the impossible part but it is possible that janet yellen may in fact begin the process but it's never going to be completed long before that day comes we're going to have to go back to zero percent interest rates the fed's going to relaunch quantitative easing q e four maybe it won't be jane

bank of england, ecb, or the fed? subadra: um, the fed. >> fed. england. : jonathan: that is it for us. from new york, this is "bloomberg real yield." ♪ >> [static buzzing] >> [indiscernible voices] ashlee: this is colossus. ♪ ashlee: it came to life here in england at bletchley park in 1943. the machine raced to decrypt german messages by analyzing ashlee: it came to life here in thousands of words of coded text every second. ashlee: with its mix of vacuum tubes, wires, and switches,

subadra: um, the fed. >> fed. james: bank of england. jonathan: that is it for us.rk, this is "bloomberg real yield." ♪ ♪ nejra: coming up on "bloomberg best," the stories that shaped the week in business around the world. an email trail raises questions for the white house. janet yellen takes questions on capitol hill. some big banks answer investor questions with earnings reports. >> it is almost an embarrassment being an american citizen traveling around the world and listening to the stupid -- we have to deal with in this country. nejra: central bank official share exclusive insight into monetary policy. >> at that low level you would have historically seen more inflation pressures. we are not. >> as long as necessary, we will implement

so the fed is not just the fed anymore. the fed is closely aligned with what the new administration is doing. so the fed intelligently being very, very cautious, because when are these supposed tax cuts going to happen? can trump continue supposedly supporting job growth? the fed is doing the right thing, being cautious at the same time, the fact they will not buy any new bonds in ridiculously gargantuan way they have been, that leads me to believe interest rates no matter what will trend higher. cheryl: nicole too, we had this discussion so many times, the fact that yeah, obviously the market participants you have one eye on washington and one eye on monetary policy but seems lately, nicole, it is more about washington political moves or inaction in d.c. that is affecting the markets. >> washington never had such a correlation to the markets like it has the last year or so, so that is no doubt. as we get lines from washington gives jitters to the markets we do see that, geopolitical things as well. as we delve into the min

>> the markets and the fed are where we begin today the fed is expected to leave things unchanged howawkish is the key for you and your money as president trump tells "the wall street journal" that he hopes chair janet yellen will keep stocks low for the foreseeable future stocks once again are higher steve liesman following the action in d.c. and bob pisani tracking the markets at the nyse is this all about balance sheet reduction conversation or do rates still matter >> you've got that right there is a slight, brian, chance of a surprise this afternoon if the fed were to announce reducing the balance sheet now rather than in september as expected fed chair yellen said it could begin relatively soon but there is no reason to surprise the markets today. the fed does mention the balance sheet reduction and the question is how it will react the big story has only been the modest reaction in the fixed income markets really a lack of concern with this announced plan by the fed to reduce the $4.5 trillion balance sheet. and inflation continues to run below the 2% objective the fed statemen

it may be enough to continue to support the fed rosie -- fed/'s expectation -- fed's expectations.ll focus on the more lackluster reality. vonnie: one of the main question you posed is, what will the fed do with reinvestment? have a look at the chart we have. the fed expanded accidentally. now it will eventually start tapering down the balance sheet. what is your answer for how the fed will reinvest? keyword ise eventually. the fed has acknowledged they would like to begin shrinking the balance sheet. calendared unspecific language. by the end of the year is what we have heard as of late. layer ofe a second monetary policy adjustment. first and foremost, the fed wants to get the rate back to a normal rate at a gradual pace. economy maintains this more moderate pace, it may be enough to justify additional rate hikes by the end of the year. it is going to be increasingly difficult a -- difficult for the fed to adjust the 7 -- two justify the second layer. the fed has remained intentionally vague, giving us them theving opportunity to push the adjustment of the balance sheet out to 20

with respect to monetary policy the fed has raised interest rates four times since 2008. overall the fed maintains an accommodative monetary policy with a balance sheet that stands at $4.5 trillion in assets. last month the federal open market committee issued an addendum to its policy normalization principles and plans detailing how the fed will gradually reduce its assets. i welcome more comments from chair yellin about the state of the economy and the path of monetary policy. the committee continues to work to find bipartisan fixs to address many issues outlined here today and i look forward to working with chair yellin, the federal reserve and the members of this committee. senator brown. >> thank you, mr. chairman, for holding this hearing. it is wonderful to have you here and thank you for your service. since your last appearance before this committee the fed has increased the federal funds rate twice, employers continue to create jobs, although a slightly slower pace than last year, and wages have increased modestly. the fed continues to lay out its plans to sell o

and there's a long history of presidents renominating fed chairs. are you open to serving another four years as fed chair. >> what i previously said is that i absolutely intend to serve out my term. i'm very focused on trying to achieve our congressionally mandated objectives and i haven't had to give further thought at this point to this question. >> the fed chair also insisted balance sh r could ben soon, but didn't give a month. many say it could happen as ter possible this month. for "nightly business report," i'm steve liesman. >> a separate report from the federal reserve shows the labor markets are getting tighter. according to the beige book, the job market is strengthening, for both low and higher skilled positionings, particularly in construction and i.t. sectors, but a drop in gasoline prices has kept the lid on inflation. overall, the central bank reported modest to moderate economic growth or really kind of beige. >>> despite expectations for modest growth, historically, the economy tends to cool after series of hikes which the fed chai

how about the fed? >> well, we have supervisory responsibilities -- >> no, you do, but are those fed members who are sitting in the board meetings, are they potentially criminally or civilly liable for the decisions that they push a board to make? >> not to the best of my knowledge. >> mine neither. that's concerning for us, and that is -- and i'm pushing you on this because listen, you do have a supervisory role, and i want you to do a good job, but from the feedback that we get, the involvement that the fed has in our corporate boardrooms has far surpassed i think the vision that any of us had in this room, and it concerns us. >> so, let me say that we have talked to many corporate board members and understand that there has been an accumulation of a large number of items we have indicated that board members along with senior management should be responsible for, and -- >> i don't believe you have the authority, madam chair -- >> -- believe we should clarify -- >> i don't believe you have the authorit

the market are at one when the fed is three.hat jamie september clearly he is right, but you think markets are mispricing this? >> overall, financial conditions are relatively moderate. what you are seeing is that the fed is doing this normalization, but the markets are not buying into that yet, and that is what we are seeing right now where basically we are not actually expecting this tightening to come through from the markets, so we have to focus on whether they continue to push for this normalization. haidi: thank you so much for that. macro strategist there at state street global markets in hong kong for us. image up, how this altering selfie app is getting a boost in the market. this is bloomberg. ♪ rishaad: you are back with bloomberg markets. i am rishaad salamat in hong kong. haidi: we are counting down to the open of markets. we are minutes away when it comes to the hong kong open. take a look how the premarket is shaping up. aoking to extend gains into third day. a pretty good week given fluctuations across broader ma

an fed, they are having argument and this number makes the difference.he argument is, should we run elow,employment rate b or are we risking explosion later on? we need to get the employment population ratio higher. this has a long way to run. this can be a bad spot for bonds, and we are coming into the second half of what has been hit. >> let me defend robert. the funny comment -- he has a 30 year track record that he has been right on. we have been looking for inflation to come back ever since the financial crisis. nothing, nothing. therefore, the burden of proof really is on the people who look at the data 15 different ways and conclude that someday, somehow we will end up with inflation, and that is what we will be trying to protect ourselves from. what the world wants more than ond,hing else is a good b and i think that is the driver of yields more than anything else. idea that this whole the inflation argument is going to keep the fed from doing what they say they are going to do, which in addition to hiking is reducing the size of the balance shee

>> um, the fed. >> red. -- fed. >> bank of england. jonathan: that is it for us.bloomberg real yield." ♪ ♪ p.m. in news 12:30 york, 5:30 p.m. in hong kong and -- i may, 12:30 a.m. in hong kong. welcome to bloomberg markets. ♪ from bloomberg world headquarters in new york, top stories on the bloomberg that we are following. in markets, u.s. stocks and bonds rally in along with oil and gold. we pray deck on the moves -- break down the moves. the optimism fueling stocks after president donald trump's election going down a little bit, we break down the earnings from citigroup, wells fargo and morgan chase. and it is july, but winter is coming as game of thrones returns to tv screens, why the company is pulling back on its streaming service. vonnie: we have to wait until sunday for that, but let's get a check on the markets. abigail: the gains not looking large, but we are looking at ec

could inflationary fears rain on the fed's rate hike parade? the fed's rate hike parade? jim grant t t t t dearthere's no other way to say this. it's over. i've found a permanent escape from monotony. together, we are perfectly balanced. our senses awake. our hearts racing as one. i know this is sudden, but they say...if you love something set it free. see you around, giulia maria: the federal reserve raising interest rates for the third time last month. wall street had been expecting at least one more rate increase this year. we are expecting that to happen in september. but earlier this year federal reserve chairman janet yellen said the fed is ready to scale back on its rate increase if inflation is soft. why is this so important to janet yellen. and when i asked you during the commercial break, we are not sure. jim: pressed for it when she was president of the san francisco federal reserve bank. this number is tacked up on the wall as if it were handed down from on high. 1965, there was not one year in which the rate of inflation reached 2%. 70 basis points. .7%. so n

i'm scott wapner our top trade this hour, fed fears. the big warning today from jamie dimon that every investor needs to hear. the are the markets ready for the end of easing? with us today, joe terranova, stephanie link also with us, steve liesman, and from chicago, our own rick santelli let's begin with those comments today from jpmorgan boss, jamie dooild, te diamond, telling a gathering in europe, the unwind could catch the markets by surprise. mr. diamond saying, quote, we've never had qe like this before we've never had unwind like this before when that happens of size and substance, stit could be a litte more disruptive than people think. we act like we know exactly what's going to happen and we don't. steve liesman, i go to you first. what do you make of dimon's comments >> jamie's on the front lines there. he's going to be part of the process of unwinding the balance sheet. and i think his words of caution should be taken seriously. i think two things, though i think the fed has kind of preempted these concerns, if you look at

start downsizing its folio which will apparently happen relatively soon the fed currently has a four point five trillion dollars balance sheet in treasuries and bonds it bought up after the financial crisis the dollar dropped on the announcement while gold rebounded after sliding most of wednesday waiting for news from the feds well to dig deeper into this announcement and what it will mean for growth i'm joined now by peter schiff c.e.o. of euro pacific capital peter thanks for joining us today look the fed just released its plan for the next few months and it was of course something that many people are predicting one of them is that the interest rates were not going to rise not going to change what kind of impact do you think we can expect from this sort of announcement. well no impact i mean pretty much everybody knew the fed was not going to surprise the markets and hike rates this meeting although they did indicate that they would begin to shrink their balance sheet relatively soon but by relatively soon they may mean they may mean never because you know shrinking the balance s

that may delay fed hikes but there is still hope from the fed that there might be a hike at the end of the year. i think the market believes that the balance sheet reduction that maybe hard to deliver when there's no sign of sustained inflation pressure. always great to talk to you. thanks for joining us out of singapore. you can follow his commentary live on the bloomberg. get a market rundown in one go, get their commentary, expert reaction to everything that's going on and also what is affecting your investments right now. let's get some other headlines with paul allen joining us in sydney. paul: the chinese industry maintain the pace in june and helping indebted companies deal with our own. profits rose more than 19% from a year earlier, increasing the pace from a month earlier. the commissar lowing estimates in the second half suggesting company borrowing costs may increase. growth in south korea slowed in the second quarter as investment eased and export crimes fell. the economy had been showing its fastest expansion's 2015. gdp grew by .6, down from 1.1% in the previous period.

vonnie: central banks lead to fed policies and investors read between the lines.make outside hires while others groom from within. a setback on health care could ck the trump agenda for a loop. >> this failed and failed miserably. vonnie: bloomberg guests offer insight into the market. >> you can expect

also the fed policy meeting.il producers discussed the at-bat -- the output will not be able to drain the global glut. the nasdaq is more expensive than the -- i am haidi lun in sydney. we are hours away from the open here in australia becoming the first intermarket to come online for the week -- major market to come online for the week. the get a recap on how u.s. markets ended on the friday session. largely unchanged, of course ahead of a pretty big week when it comes to eco-data. the head -- the fed meeting not expecting any move, but markets will be watching the statement for any guidelines on how the balance sheet outline will work. we also have gdp numbers as well. indications on inflation will be key whether we see the bond market, the tips market beginning to second-guess janet yellen. indices, wehe bank are close to record highs. the s&p largely flat, the dow did thisth of 1%, ahead of a big week of tech reports. in asia we have us futures pointing south ahead of the flat close on the u.s.. new zealand i

defense, only fed the fed that is missing it. that is what matters.issues that are not really monetary policy. what i am talking about is the macro picture. below 2% inflation is not the end of the world. it is less than perfect. says we don't have imminent rate hikes, i would like to see her being proven correct in the next few weeks. banks,the central inflation coming back into the system. , you can't goeing against that. >> we are holding our breath for that. it is interesting, because we have not seen inflation pickup, and we are all waiting for that, you get the sense that the fed is getting less data dependent. >> i hope it is that. this concept of too long, -- data dependency. guiding.to nobody is i feel central banks have lost their mandate. keep having a sense of what they are doing lately. you expect basically the same thing. have you think the markets misinterpreted yellen? do they get too excited? years i face it, four would argue, i expect them to do its job in the least painful way . that is not going to be possible. every time they feel

you are not getting compensated in terms for the spike in the fed.n: and you have written about investors sitting on their hands playing a game of chicken. lisa: you have the extra yield that people are receiving to own investment grade bonds over benchmark rates shrinking to some of the narrowest levels we have seen in the post crisis era, and to your point, i wanted to make a point about the volatility. look at the move index, which implies volatility in treasuries. the lowest level on record. the last time we saw rates like this was right before 2007. this is june 2007. he saw what happened after that. here point, this isn't going to last forever. the more people that get complacent, saying look, we do not think we are getting compensated for the risk that we are taking, 61% of investors surveyed at bank of america believe these spreads are too rich, and they keep buying because they think everybody else will. this is going to end badly, but people don't seem to see it company. -- happening. jonathan: is this pushing you to take more risks than yo

you see a lot of things in fed minutes and fed speeches.adual rate hikes. they expect to reduce the balance sheet, but did not say when. -- when janet yellen testifies to congress, theyormer fed economist, are definitely going to tell us they are moving ahead. here is what josh said. >> they will definitely be moving forward with the balance sheet reduction policy. as early as later this month. a report on friday, they want to reinforce the message that they are concerned about imbalances in the one they can affect that is to reduce their balance sheet. there is a hint there that they are more likely to take action. >> world interest rate projections, still pretty low, 16%, not too much conviction from markets and traders. december is when you have odds-on there, 52%. john williams in sydney tomorrow, lael brainard at a conference on thursday. we will have a lot of fed speak. we hearderesting that that the fed may not do the third rate hike and is concerned about inflation expectations cemented at a low level. getsll see if janet yellen tho

the fed will hike or the fed will have to backtrack.idea they want to hike three or four times. the market is not there. tom: thank you. michael, thank you. will continue on radar. ira will continue with us, as well. handsome michael darda. bring it up. . did i do something wrong? there it is. this is bloomberg. check it out. ♪ tom: good morning. nejra is in for france wayne. -- is in for francine. the future of the republican party experiment, that is what we are focused on. can you make a parallel to the ghost of 1973 and watergate? if you are looking to see what is going to get us out of fever,riod of political it will not be restrained from trump. every day he will find something new to titillate and excite and discussed us. have separation of powers in this country. the question is when push comes to shove, it is either the , or ifcans in congress they are voted out, then congress as a whole palm -- a whole, it is a 5-4 split of the justices in the supreme court, we are heading towards one of those two outcomes. politicalof civil d

the fed realizes they have to go slowly. couple other things it yellen said, the opioid abuse in the united states. becauseis looking this they think it is affecting the labor market and participation rate. gdp, i do notbout think it is a cliff. she said she would love to see it, but 3% could be tough with a low productivity and an aging population. betty: thank you, we will continue our conversation on the fed strategy. a former fed governor will be joining bloomberg markets: asia at 10:10 p.m. in new york. yvonne: do not miss our interview with robert kaplan, joined by our daybreak america crew in new york. betty: we will speak to cumberland advisors vice chairman. this is bloomberg. ♪ yvonne: this is "daybreak asia," i am yvonne man in hong kong. inty: i am betty liu here new york. we dig deeper into janet yellen's testimony with cumberland advisors' bob eisenbeis. and, kathleen hays. bob used to work at the atlanta fed and was director of research. give me your quick take of janet yellen, two days in. bob: that was not m