what is the fed looking at? what has the fed been signaling?hat does the fed know that we don't know. i don't think it would be a good reaction. >> what are the odds today. brian asked what if they don't do anything. what if they doe hago half a po. do you think as we move into next year that the internal discussion within the fed leads towards higher, quicker if there is a lot of fiscal stimulus. in other words, that the fed will feel a need to counteract that stimulus? >> i don't think there is any chance of more than a quarter point, similar to what bob said about not much chance of -- zero on the upside, zero on the downside, they communicated pretty clearly it is a quarter point. in terms of the outlook for next year, i think they'll continue to emphasize that they'll be patient and watch the data. and that means that whatever the policies are, if there is a stimulus plan, it is likely to happen later on in the year, and we could easily, like we have seen the last few years get slower growth, not just in the fourth quarter, as we were hear

, fed, fed, fed.fed as we count down to that 2:00 decision, the 2:30 press conference. talking two sectors that have come under fire in the incoming trump administration, biotech and tech. tech was an outperformer in yesterday's session finally. and the tech summit at trump tower. and we're on dow 20,000 watch. a guest we're having on says there's another 20% go in this rally. and a third of the team is right next to you, sara. we'll see wilfred later. >> i'll be racing that way. see you shortly. "squawk box" kicks off in 11 minutes time. >>> still to come, stocks continue to hit new highs. will today's meeting of the fed fuel or challenge that rally? we'll have michael barr how he is positioning himself. ♪ we're drowning in information. where, in all of this, is the stuff that matters? the stakes are so high, your finances, your future. how do you solve this? you don't. you partner with a firm that advises governments and the fortune 500, and, can deliver insight person to person, on what matters to

fed's plot.ctual rate decision, we will also track the economic forecast and parse the language tied to the characterization coming up in our special. vonnie: for more on today's upcoming fed decision, let's bring in julie hyman and oliver it.it -- oliver ran it equity euphoria. i was talking about peter expressing the surprises that markets lovety this. suddenly is going to be no qe. julie: everything is fantastic. this is a chart dani burger made earlier and i made one tweak to it. the fear barometer and look at the risk appetite or lack thereof in the market and you can see the fear barometer has come way down at the same time the blue line at the top which is a measure of funds investment in the stock market has been going higher. danny said there's not a lot of hedging going on and the people are pretty fully invested. the bottom of that is the put-call ratio of the s&p 500. people are not putting on bearish option that's because they think we are going to be just fine with this rate increas

-- at the fed. have the 10 year yield and what happens to the s&p. what can we usefully do looking back at the last cycle to look at this one? let's remember the regulatory landscape for financial services particularly in the u.s. economy at that time. 2004-2006 was a time when before dodd-frank, when proprietary trading was commonplace. if you see the level of gearing and financial invasion that characterized that time, then it's quite possible that you such an expansion in the u.s. economy that the fed needs to aggressively tighten during that period. we live in a very different world. in, you'd expect the lead-in times to be most of 2017 to get that stuff through congress and the senate. therefore i want to see it actually play out before then. anna: simon french stays with us here on the program. coming up, a different kind of spread to worry about. comments on inflation will be closely watched at today's meeting on rates day. eu leader summit in brussels will focus on issues from brexit to russ

either the fed pulls everyone else up, or everyone else pulls the fed down. do know that is going to be a critical question. watch the markets that trade-off these differentials. that is why the currency market is so important. if there is no action on the other side, if germany does not also move away from overreliance, the dollar will continue to appreciate. that will fuel anti-trade rhetoric in the united states, and they will get nervous. it is critical the u.s. gets help from europe, and particular. >> the chief economic advisor of allianz, thank you for joining us today. more to come for the fed and central banks. mario little to later on. marketsre equity reacting to the second u.s. rate increase in a decade? ♪ >> this is "bloomberg markets: middle east come go live on bloomberg television and radio. >> let's get a quick check of the latest business headlines. japan has passed a bill legalizing casinos paving the way for billions of dollars a potential investment. however, more legislation is needed before so-called integrated resorts can be built. mea

i think the fed did give us a surprise.de a move towards guiding us towards three rate hikes next year. there was a broad move among members in that direction. the idea that the fed is telling us not only that it moved yesterday but that it has works to do for 2017 was the surprise. it seems to us consistent with what we're seeing in the economy. we'll see where the data goes from here. >> even if handle three rate hikes next year, can china or the emerging markets? many markets are already in correction. >> the key is whether we're right, there's a broad shift away from disinflationary forces at work here, global manufacturing is picking up, commodity prices are firming, we're changing off problems of the last few years. em economies don't need higher rates. the fed tightening will be a constraint. if it's being offset by a stronger global economy, we'll be okay in that mix. >> in terms of what we can expect for gdp growth moving forward, the fed not as upbeat as maybe where the market had got in terms of that regards, wha

fed. jonathan: how do they respond? i look forward to the news conference with chair janet yellen. jeff known as the bond king speaking at a presentation that we are currently getting to the point where further rises above 3%, which has a real impact on corporate bonds and junk bonds. how sensitive do you think that will be to that? michael: they are sensitive to it but also political implications. anything janet yellen says, but do not expect them to do a whole lot. it is moved up with the forecast on what might happen absent fiscal policy. they cannot figure out and they do not know exactly what we will get from capitol hill. they do not want to talk about until it comes. expect janet yellen to say will .eact to policy as appropriate if somebody says inflation will rise, she will say the fed will taken into account. they do not want to get ahead of what politicians will do because only brings fire on them and they do not want to be criticized for meddling and policy and they were counter

fed chair yellen's fed testimony at 2:30 eastern. >>> coming up we'll speak with former fed governorson ahead of today's big announcement. and as we head to break quick look at shares of nvidia on the rise after an evercore upgrade. stock up 181% so far this year before today. but evercore says it has more room to run. and it is running up about 3.5% right now. much more ahead. stay with us. happy anniversary dinner, darlin' can this much love be cleaned by a little bit of dawn ultra? oh yeah one bottle has the grease cleaning power of two bottles of this bargain brand. a drop of dawn and grease is gone. >>> according to economist david rosenberg, the big rally is about to run into big trouble. he reveals the five things that worry him right now at tradingnation.cnbc.com. more "squawk on the street" coming up. >>> welcome back to "squawk on the street." stocks are lower marginally in early trading with the fomc rate announcement in focus. energy stocks are taking a hit as oil falls about 1% following a reported rise in crude oil inventories. laggards like chesapeake energy, murphy oi

the fed supercharges the dollar.s now at a record high, dollar at the strongest level against the euro since 2003. for more, we're joined by the global cohead of fx strategy at deutsche bank. alan, what is going to stop the dollar? it has been marching up. alan: i think it is too early to talk too much about what is going to stop the dollar. a couple of things come to mind. longer-term, the kind of things that happen soon when you see a dollar turn are the current account just blows out really. a deficit in the order of about 5% of gdp is a warning for the dollar being overshot. another one would be policy turning, and that will not happen any time soon. neither signal is pointing strongly towards the turn. the trump administration comes in and says too stronger dollar is bad for the u.s. economy, and maybe they do some thing more than job owning the dollar down, to then maybe have a shot the downside of it you need something pretty big to happen to really turn the dollar down. alix: your call was for euro-dollar par

a fed day.♪ wages are moving and the money supply is accelerating, those are the critical issues which engender inflation. they are on the move at the moment. i see no evidence -- evident in denver on either republicans or democrats park or anybody else for that part. it is politically a hot potato. guy: that was the federal reserve chairman alan greenspan speaking to bloomberg about the u.s. economy. ,et's bring back in dominic senior strategist at hsbc. what is going on in the u.s. labor market? whether or not we are a full like,ment, which it looks or the participation rate an incredibly low number there is real. explain certain bits, but i still don't know yet whether or not we are at full employment or whether the curve will start working. dominic: the proof is in the pudding. the fact that wages threatened to push off that come back again with the inflation of wages, suggests there is still capacity. forecast,ook at our we are not looking at a big squeeze in inflation. productivity to be s

a former fed bank president said there is a risk and former fed chair alan greenspan said you have to watch the labor markets. >> the labor force is running out of extra workers. the unemployment rate is under 5%. you can't go very much lower, hich means that the 150,000 to 200,000 increase in payrolls a month is not going to continue on because we're running out of people. >> the fed will give us its latest view of the economy and inflation. it has a sum mear of economic projections, we last heard those in september. the december projections will be announced when the fed releases its policy statement. economy, inflation and the path to rate hikes next year, watch that more than anything else, does the fed signal anything more or less on rate hikes for 2017. >> as we're hear a gradual path anticipated but what about the expectation that donald trump will rev up the u.s. economy and cause more hikes next year? >> fed official saced so far they cannot base policy on what might happen, they can only base it on what they see new. there's a surge of optimism on donald trump's election. th

the fed as a whole, she and thets the fed chair fed as a whole, they cannot make policy on a promise.licy that has been promised in terms of progrowth more inflationary, all those have to materialize. the fed cannot be preemptive. they have to be reacted to the policies once they are passed and have had an impact on the economy to which is all, as she said, a cloud of uncertainty. shiften: you forecast the to three increases, but the markets were not expecting that. because of the uncertainty on p, in your view, why have the markets reacted so dramatically? is this idea, it is moving from once a year, yellen. the fed thought they would get that in. there was a sense it wouldn't get there. the markets have had a major shift in their expectations about inflation and growth. whether that is accurate or not is debatable. it is feeding into one of the fears they had, rather than going against, they always had it right and the fed had it wrong. some people think there could be more rate hikes out there, if we see fiscal stimulus. of course, this did not encompass a lot of fiscal stimulus. t

for people who don't know what that is, in essence, fed officials, possessive, not official fed, fed officials rate projections. it is called the dot plot. anything you see here, because it looks like gobbledygook to a lot of our viewers. what can you see here and point out to educate our viewers on? >> back in september the fed said they expected to raise interest rates two times in 2017. and, in this time, they said they expected to raise rates three times in 2017. yellen was asked why is that the case? she said one of the things that they're factoring into their projection of three rate increases next year is fiscal policy. in other words if trump comes out with very expansionary fiscal policy, the fed will not accommodate an economic boom. they will only accommodate an economic boom if they see more productivity growth and faster growing labor force. if the economy starts overheating, the fed will be raising interest rates more than that. that is why i think she has the potential to be a thorn in trump's side for another year-and-a-half. liz: oh, i might think so. i see that. it

>> you know -- the fed -- no one cares about the fed. no one cares about the fed.hen was the last time the market absolutely cares. >> doesn't care. doesn't care. >> >> we've got the fed next week. >> hold it, you guys! all at the same time. tim, talk. >>. >> the fed has been clearly a sideshow to elections and obviously to a story where business confidence -- look at the confidence numbers out today. consumer confidence, tenth of a point off the high since 2004. so, yes. we know that the market is very euphoric as david is saying. except if businesses continue to spend and very smart economists have gone from being very cautious to being very optimistic on next year, based upon fundamental fiscal change in our economy. so what do you buy? you buy the reflation trades and the things that have been working all along. ag is starting to rip. if you look at what we have here in the commodities space and what we have in the mining space and what we have in the autos, look at gm. that's where you get valuation and you also get industrial. >> this is 100% because of trump

the fed does not want to disrupt financial markets. the fed wants everything to be smooth.they could do anything to avoid any disruption and volatility they will do everything in their power to prevent crashes, volatility to move around. >> can you remember the last time a central banker said fiscal policy may not be the answer at this point? that seems like a big deal. i get that we are at a different point but that is a shift. >> i fell out of my chair. for a long time in europe and japan the answer has been more fiscal. now we are at full employment. the reason why she is saying we don't need it, if you do, the main thing you get is inflation. it makes sense but it is a regime change from the way that central banks have been talking about things. >> maybe i can interject. the congressional budget office has credibility as an expertise. if they don't think we're at full employment yet, they think broad numbers we're at a million full-time jobs short of full employment. are alongessments some lines. we look at the part-time workers who want full-time jobs, when you look at

if we get the rate cut from fed, 92% of investors expect a 25 basis points rate hike from the fed.he dollar already run up in anticipation of that and now will we see softness when ice delivered? we'll have to wait and see. that fed meeting begins today, decision tomorrow. gold prices down about half of a percent today. >> if we want to look forward the fed the key for investors is going to be parsing the signals in the statement and in the yellen news conference. a lot has changed since the last fed meeting and, yes, there's about 100% probability fed raises interest rates by a quarter of a percentage point. how do they reflect the change narngts. oil h oil has risen. the asset markets, they look at this for financial stability the entire market picture has all become quite buoyant. how aggressive will that make them in terms of forecasting interests rate hikes to put a lid on inflation and to get the economy back to a normal place of interest rates and whether that will upset the rally. >> we heard from janet yellen. the issue on that is not so much she might be down beat she mig

findings from the cnbc fed survey. steve liesman has been guiding us through the details. >> first we asked our 46 respondents, why is this market up so much? 82% say policies from the new president. what you see is that 56% believe the market is too optimistic about what they think is going to happen and when it's going to happen. 42% say they are realistic. and that's why when you look at the expectations for where the s&p is going, they're more muted than what's happened. currently 2256, or thereabouts, looking to go to 2357. big jump from the forecast back in november but looking to go less than they had previously. the market up right now, 2018 forecast, just about 9% higher. all this comes amid expectations for higher interest rates. you'll see right here the new expectation, well, they surpassed that since the last forecast. now it's 290 for the end of '17 and 344 for 2018. remind you again of the main findings of this survey. you can read this online at cnbc.com. 90% say the fed will hike tomorrow. 44% say the

previously the market was below the fed and the fed ended up there.n see the significance is the market had it right last year and the fed had it wrong. fed looking for four rate hikes in december 2015. our cnbc survey had two, the actual was just one. the next hike looks to be priced in around june, possibly another one being priced in for september. but it's all in that famous phrase data dependent. for yellen and company, they want to see what the president actually proposes, what congress actually passes, and then we have to figure out, sara, what impact it all really has on the economy to know how that's going to influence rates. wilfred. >> steve, thank you very much for that. we're going to discuss this in more detail now with chief economist and kevin karen, washington crosses advisors portfolio manager. good morning to you both. dean, let me start with you. we saw the market selloff yesterday in reaction to the fed meeting. why did it react in that way? and why are we shrugging off that negativity today? >> well, certainly we had a hawkish su

we want to focus on how much the fed will raise in 2017, we are on fed watch.k from yesterday. dow open 10 points. nasdaq in positive territory

the fed is not saying it. fed has a bunch of democratic appointees on, they don't believe this stuff. let's sit back and watch. i think growth will be closer to 3 next year. if it is closer to 3, aaron will say that's because we gave you 3. it will go from 2 to 3 over the next few years. >> the facts are the facts. >> i know you're not a market prognosticator. a lot of people compare this moment in time to reagan coming into office. i just want to ask the question whether that's a fair comparison given the debt ratio today is so materially higher than what it was then. pe ratios in the stock market back then were nine times, now about 22 times. people think this market is supposed to double. is that possibility given where we stand? >> it's hard to see how, especially with interest rates so low, which also drives up the multiples. justin wolfer had this great paper on the stock market response to presidential elections. the first reagan election drove equity markets up. the reagan effect was north of 7%. so yo

it is all about the fed. and the dots we trust. , does ital tightening turn into an avalanche in 2017? exit balancing act. mark carney walks the line between growth and inflation. how does the boe make policy in the dark? and the year of suspense. the fed takes the pressure off the frank but what does a 2017 political upheaval ahead mean for this safe haven trade question mark let's talk a little bit about where we stand in terms of the markets right now. the futures trade, we're looking at the ftse which is absolutely flat as we watch what is happening. let's talk about the next trade. what is going on with the smb today? the snb are expecting to hold that they are at a -75 basis points on their key rate. the important thing i think for the resident was him i will be speaking later this morning is that not only did the fed raise rates but they pushed up there dot plot. the expectations from the fed interest-ratee increases in 2017 and that kind of normalization makes his job little bit easier. it takes some

about ending fed, hashtag end the fed. >> bedtime reading.hink, kennedy, is it any better, you think maybe treasury -- another view 535 politicians should handle this? >> maybe this is conversation we have to have. you how do you slice up -- neil: does that get you nervous? >> -- between treasury and congress. the first thing we have to do if we're going to be conservative, everyone here is wearing a suit, we have to audit the fed. neil: liberals wear a suit. >> find out what is going on there. >> getting rid of the fed, of all the dopey libertarian ideas like, you know, legalizing some really bad types of porn, getting rid of -- neil: wait a minute. back to the fed. >> i just, i know what libertarians think about it and they're crazy. getting rid of the fed is one of the dumbest ideas. i'm not saying it doesn't -- neil: depends what you replace it with? >> what will you replace it with? congress? think about how absurd. neil: you're saying treasury. >> treasury department? >> when you have your appendix taking out what do you replace it with

>> i doubt the ability of the fed to raise interest rates thinktimes a year to >> i the fed took a smalltep beyond being just data dependence. if you walk back this notion of high pressure, this is a fed that could be tighter than we thought otherwise. that's what really moved to the market. it wasn't so much the statement as the press conference. onid: straight ahead "bloomberg best," one of the year's most significant showdowns, apple against the united states government in a dispute over privacy. did anybody when? -- win? >> and much of his works in anyone's favor. david: this is bloomberg. ♪ david: bloomberg's taking of extent forward in the race for self driving cars. come -- customers in pittsburgh can hail autonomous vehicles from the smartphone. thiser has embarked on project that everyone thought would take decades. it leaves them ahead of google and tesla, even though google seems the leader in terms of technology. you are watching the "bloomberg best," 2016 america's year in review. i'm david westin. apple remains the world's most profitable technology company, and for a few w

take me inside the deliberations of the fed.ow much will the conversation over the next year be sort of determined by what's going on on capitol hill and between congress and the white house on tax cuts and infrastructure spending? >> i think they're going to focus a lot on that. because over the last year, we really haven't had much change in policy at all. and there's a prospect for some significant tax reductions, also a more internationally competitive tax system that will bring some of that $2 trillion that happened offshore on shore. some regulatory relief, and some more spending. if you put all those pieces together, and actually can get a package together that is really pro growth, productivity-enhancing quickly, that could significantly increase demand for labor, could push up wages, and push up prices. so they're going to look at that very carefully to see. i think it's going to be hard to get the pieces together quickly, but they'll be looking very carefully at that. >> and kate, given what we saw today and what we he

and the fed didn't touch them. there's not one dime less now after they raised rates than there was before. trish: how does this affect how you're thinking? go ahead. >> the money can turn into inflation -- all i'm saying that money can turn into inflation. they can do whatever they want with rates, until they get rid of the excess reserves, they aren't actually tightening the economy. not at all. >> yeah, but the market will tighten for you. that's what's happening. >> no. >> no. >> the money creates the growth. >> mortgages are more expensive -- trish? trish: it's the pace of it, brian, if you went to 6% overnight, we're not looking at that. if you are gradually moving higher, one would think it gives enough breathing room for the economy to grow, for the markets to continue powering higher and interest rates move higher but in a sort of gradual, in a gradual move. not like you wake up tomorrow and you are suddenly at 6%. >> but the risk, trish is -- trish: different environment today. >> this is where i agree wi

the fed decides, the probability of a fed rate hike this week is at 100%, but the question remains, what will the fed forecast for next year? and getting back on track, uni credit planning a nearly $14 billion stock sale, hoping to attract investors with cost cuts and a balance sheet clean-up. and that wraps up what you need to know. we begin with our top story. president-elect donald trump nominating exxonmobil chairman and c.e.o. rex tillerson as his secretary of state. to discuss, we bring in our eam, marty, and michael mckee, bloomberg's international economics and policy correspondent. let's start with you, marty. it's the worst-kept secret in d.c. the last couple of days, but the confirmation could be difficult. walk me through it. >> there have already been a number of key republicans who have expressed some doubts about the tillerson pick. marco rubio being on the foreign relations committee, john mccain being an influential republican in the mainstream. but ultimately i think they're probably going to give donald trump latitude on this one, and i would expect him to get confirme

fed: breaking news on the on u.s. banks.reet banks are about $17 billion short in building up funds the federal reserve says they will need following the collapse, down by almost half on the central banks earlier estimate in october 2015. the total shortfall of $120 billion, and the firms are required to build cushions of long-term debt that can be transformed into equity in a new company if the old one fails. that is according to a goal of the fed governors that they are expected to approve thursday. it estimates four banks in about $17 billion more in qualifying for debt and capital by the january 1, 2019, deadline. shares of yahoo! falling in the early session. another stunning revelation that more than one billion user accounts may have been compromised. yahoo! says the latest incident is "likely to stick from the hack the company disclosed in december." joining us is cory johnson in new york. what do we know about the latest breach? amazing, theack is biggest hack ever in the history of hurricane, and it is a government

has been met from the fed's standpoint.s report was marginally weaker than what we were expecting. we think the fed will continue to highlight two hikes next year. the question for the market is how many more? this report does not make the fa de to suggest more than two. the question is if we get significant stimulus, do we have a pickup in inflation next year, and the fed may suggest more hikes. but the market is well priced for december. the market is also well priced or potentially two hikes next year. the front end of the yield curve could stabilize here and we have time to figure out how much discussed and meals we get, what the growth impact would be for the market to take the next lack in terms of fed expectations. get some want to breaking headlines. we have that decision by s&p on south africa. it is affirming the outlook negative. this is what investors were feel for love, that s&p would change the rating. needsee the financing beyond expectations, so that has risen substantially, and gross debt in 2019 will be 54

anna: let's talk more about the fed. investors are -- are expecting janet yellen to deliver the central bank's rate hike of the year today. appears a foregone conclusion with markets perhaps more keen to hear the fomc 2017 forecast in a press conference at follows the statement. outlook for fiscal policy remains a big issue. spokene lacqua exclusively with the hsbc chairman and got his view on the impact of stimulus in the united states. there are some who would argue that inflation would be a good hang. mean -- would be a good thing. that should mean interest rates would begin to rise. zero are near zero rates are very difficult for him a policy perspective because there's not so much flexibility. riskegin to get more of a car again and savers begin to see some reward for their savings. -- a risk curve again. you can argue both sides, and economists do. our special coverage of the fed today starting at 6:00 p.m. london time. let's discuss the prospects of the u.s. economy, both monetary and fiscal. guest joins us here o

but, if i could get back to the fed, and a wonderful chart, this ofws the fed powers forecasting because yes, the fed was wrong in the amounts of hikes a year ago, but not run on other measures, has it? michael: they are meeting their mandate in terms of maximum stable employment and stable prices. they are forecasting they are going to get there, the 2% target. that is the basis for the rate move. when you look at the conditions, that is justified in raising interest rates, and that is what they will say today. the question is is this the right setting for interest rates, or should rates be even higher, given that amount of unemployment, and that level of inflation? that is going to depend a lot on the political aspects, as vince was talking about, of what we get from congress in the coming year. vonnie: michael, to that point, on my bloomberg -- i know you want to ask a question to vince relate to this, but let me ask you first. the federal reserve will likely increase in the median it's forecast. be enough, or might we see more? basedl: we may see more on the current economy, the traj

and markets, there is no more fed-induced rally. probably fed is over. >> nancy kengla. is this the kind of dip you would want to get into today? >> it's a start, bill. thank you iltflt. >> we had three increases erm. the street and the consensus was it, too. i agree with heather and steve, i think it's just the rate hike was baked in, but her comments were not. >> our steve leaseman was in that meeting. he's stepped out to join us with some thoughts and reaction here, steve. >> yeah, i think the panelists have it right, that the market has a little catch-up to do. i think it's interesting, as rick santelli described it earlier, it's a bit of a flat inner that the high. the way the market must be taking this is as follows. . they repeated that we are not yet putting in the expected trump rate hikes. i think two years from perhaps today found itself a little bit more behind the curb. it shows you there is a single rate hike in 2017 additionally what had been previously forecast. to the point the long ks. . there is where the risk is in temples some of the many. >> we're t

the fed is not a political organization, correct? >> the fed is an independent agency.its members are certainly appointed by the president and confirmed by congress. but they are intentionally insulated from short term political pressure and there is no evidence that any of their decision making is the result of political pressure. >> fed chair ja janet yellen sad she with would stay until the end of her term. >> donald trump will be able to fill two seats, but congressional republicans refused to hold hearings on those nominations so those two vacancies are still there. the interesting question is who he wants on the fed. you know donald trump is by nature and by his long career a borrower. the kind of guy who generally would be thought to favor lower interest rates. he now leads the party of lenders, the republican party, which has long thought that fiscal and monetary policy should be a little bit tighter. and that would tend to argue for the type of governor who might want to raise interest rates a little more quickly. so how that balance plays out between who donal

we have this fed decision tomorrow. still consumed by trump, reading the treatment -- tea leaves, seeing if he's going to name a company. our people still too focused on the significance of the administration? andrew: this is a good time to own stocks. if i had contemplated taking gains, wouldn't you push them to next year, when there was a chance that cap -- capital gains would be reduced? why would you sell in the last four days of the year? i agree, the market looks overbought. the fed comes out and raises, maybe the market just walks away or continues higher until we get into early next year. joe: -- scarlet: but there is always headline risk as well. donald trump could tweet about company stockour crashing. have you manage that? there hasrst of all, been very extreme reaction in certain sectors. on the one hand you can scratch or had, on the other you can take advantage. some of the industrials in my opinion ran away with too much. to the extent that they are making some adjustments? yes, but we sought with defense

-- it does a lot of the fed's job. mark: it depends on how much the fed moves. financialates on conditions framework and if you have a tighter dollar, the announcement of president-elect so the dollar has strengthened already. if it moves at this pace, yes, we want to revisit that rick -- rate forecast. it is financial conditions versus growth projection. 2.1 percent next year. if anything, on the light side. we see growth being stronger than that. francine: possible trade wars? mark: it is uncertain to know. we will see how much these protectionist policies that were discussed are actually implemented and to what extent they really detract growth. strength ishe line, with the u.s. consumer. if you have job growth, increase in wages. both boost spending power and it is possible the whiskey economy continues to move ahead, even if the trade side is hostile. francine: we talk about emerging markets, what does this mean for china's policy? the markets have ignored china for the past 10 months. will it be back in 2017? mark: china continues to slow down in our view

oil declines as investors await the fed decision.industry own biggest risk, says the hsbc chairman. we bring you that exclusive interview. this is "bloomberg surveillance." i am francine lacqua in london. as the fed finally hikes -- or so the market expects, fully priced in -- we have

about the fed is the fed by design was a nontransparent entity and was designed to be that way. real issue to me is not as a great person like janet yellen, political. she is doing the best job she can. the process is not opaque or transparent and that makes it difficult to understand. emily: how do you think trump versus clinton would impact the growth in general? >> where it impacts us. when you have a president -- let's say trump wins -- and you do not know what he will say next, that is the ultimate uncertainty. he has not been able to control himself this close to the presidency, he is not going to change. david: some of the last polls show hillary clinton maintaining a moderate lead over donald trump. >> the dow gaining 350 points, u.s. stocks overall gaining 2% with every major interest -- industry group and the s&p 500 up. this is the best one-day performance since march 1. >> financial markets are making it clear -- they do not want to see a president trump. >> donald trump has won the state of pennsylvania. extending his electoral vote. bloomberg news saying donald tru

where is the fed's role going to -- you're welcome -- where is the fed's role going to be in tradingoing forward? sit number one or out of the top five? >> i think you're right. i think the fed's role in terms of being the controller and manipulator of markets so to speak is stepped back. i think right now you're actually seeing a return to a growth mode, whether you're seeing animal spirits among corporates, a return to spending and consumer confidence among the household sector. i think you're seeing true economic activity beginning to take hold and that is a clearly healthy thing. >> it is healthy because it's all we've talked about and had to talk about for a number of years, you know, are corporate earnings going to matter again, is real growth -- i don't mean stock buy babs, all these sort of balance sheet tricks that companies have been doing. do you expect us to return to an environment where corporations can grow both the bottom and top lines and we're going to buy companies because they're fundamentally growing earnings again and, wow, doesn't sound -- doesn't that sound a

on the frequency of rate hikes indicated by the fed for 2017? is the fed overestimating here?hink the fed is facing a lot of uncertainties in terms of the macro economic indicators they are looking at, but also the trump policy. that will start to kick in in 2017, so the fed is at least preferring the markets for a somewhat more hawkish stance. i think it has every right and every reason to do so, because over the last few years am a fixed income markets have grown increasingly dovish in terms of expectations of rate hikes, and ds the markets to her shock, so the fed has every reason to prepare the markets. rishaad: we had to guess suggesting this 30 year secular bond rally is over with, and certainly if anything to go on, last night's clobbering of the short end, two-year treasuries, remarkable. yes, it has been a remarkable move. we have seen already quite a significant repricing. the money market future rates for 2018, 2000 19, it is still under the risk of significant rate hikes, so there is still complacency in the fixed income markets, which is understandable, so at the

and the fed chief

fed funds by one half of 1%. >> it is a more dovish fed.seems to me that stan fischer has been overruled to some extent by chair yellen in terms of the forward policy. >> all of your extraordinary policy, much of which is still in place -- are they still effective? >> i think we are providing a very accommodative policy with our zero interest rate. i think if you want to be edging closer and closer to something of a more normal setting so you do not get stuck in this zero rate environment the way japan did. >> the federal open market committee drafted a statement with a somewhat hawkish tone. gone is the reference to risks posed by global, economic and federal -- which the fed used to not make a change in march. >> did you learn anything about what the fed is going to do? >> much ado about nothing. they did downgrade the global condition and they did mention june. that is giving heart to the long bond in the u.s. by two or three basis points, but we will learn more of the next months as long as global and equity markets are stabilized. >> w

fed funds topic -- fed funds by one half of 1%. .> it is a more dovish fed it seems to me that stan fischer been+++ extent by chair yellen in terms of the forward policy. >> all of your extraordinary policy, much of still in -- much of which is still in place -- are they still effective? >> i think we are providing a very accommodative policy with our zero interest rate. i think if you want to be edging closer and closer to something of a more normal setting so you do not get stuck ithis zero rate environment the way japan did. >> the federalpen market committee drafted a statement with a somewhat hawkish tone. gone is the reference to risks posed by global, economic and toeral -- which the fed used not make a change in march. >> did you learn anything about what the fed is going to do? >> much ado about nothing. the globalwngrade condition and they did mention june that is giving heart to the long bond in the u.s. by two or three basis points, but we will learn more of the next months as long as global and equity markets are stabilized. >> what does john williams have to see in june to say

it is all about the fed, 100 percent certainty. indicatingng futures that is where it is going to go. an indicationis of how long it has been since we have had an interesting interest rate cycle. we have not seen certainty for as long as i can remember. take a look at this tribe that i got for you. is the market implied odds of an interest rate at 100%.n they have been at 100% for a wild. two panels underneath the panel, is the see the blue line bloomberg dollar index. it is going to be a big day for both bond markets and the dollar market. that will be of interest for everyone around the world about but bit certainly for markets in the middle east. many have dollar pegs. >> right here in hong kong the dollar peg. what does it mean to the region? that is the question in terms of guidance for 2017. let's do a quick check. we have mumbai. it remains a cyrus mystery. continuing to play out in the markets. positivity, topics paring back gains though. it is sidelined across the region as we wait and countdown to the fed. really feels li

the day after the fed meeting and the fed said they were raising interest rates. joe: the question is --"what'd you miss?" scarlet: plus, is cash still ken -- harvard economist rogoff wrote a book about the sinister side of cash, and we might be seeing those effects in countries like india and venezuela. he will join us in the next hour. and 20 states to mylan and other generic drug makers of conspiring to raise drug prices. we will speak with the connecticut attorney general later this hour. let's get started with a check and where major indexes stand as we head toward the close. abigail doolittle is standing by. abigail: we have stocks trading higher into the close. the dow, s&p 500, and mastec are all higher, but it is worth noting the three averages, and various times early today had peaked with record closes. the nasdaq had been within less than two points of an all-time intraday record high. the strength for stocks -- it seems investors are digesting a little bit of excited trade here -- indecisive as well, uncommitted after the fed. speaking of the fed, of

what is the fed seeing?turn once again to diane swonk, an economist with her own consulting firm in chicago. diane, welcome back. start there-- why now? what is the fed seeing? >> well, we are seeing some inflation, and the economy, the fed is sort of looking at things getting stronger, and it's an acknowledgment that the u.s. economy is stronger. i think they could have done it in september. there was a postponement to december. it's more than time for the fed to raise rates. and in fact i think janet yellin also signaled very clearly that this is a turning point for the fed. they not only-- not are we just seeing a forecast of rate hikes next year. i think we're going to see much more than one. now, it only takes two to get more than one. i think we will get the three the the fed is expecting. >> brown: they're seeing an economy that is growing, perhaps even too fast, enough that they want to raise rate. that's after an election in which many americans saw an economy that was not growing fast enough for th

morgan, a 100% probability there of a fed rate hike. if the fed is to surprise us, if their chair, janet yellen, is to surprise us, where might the surprise lie on wednesday? >> we are not expecting any moves. if you go back the last two or three years, the markets have been consistently priced below and now they are dead on where the dots are. we think there is a two-way risk pricing around is not -- those dots. the market is clearly moving into an inflationary bias and we think the fed will be more reserved, using language like what the new administration's actual plans are. to would remain for the next year. we had a guest on earlier, mark, who said his own forecast was one next year. he thinks that the economy will pick up speed in 2018 and also that donald trump will be able to nominate the number of fed governors who he thinks will ultimately end up in a more hawkish fed. how does that align with your thinking? >> we are down for two dots next year. the way that we are thinking about it, we have had this very, very low stable econ

however jordan is making comments on the fed decision. he says the u.s. fed decision shows the u.s. economy is on track which is a good sign. he is also commenting on questions surrounding the ecb saying that the snb is not a slave to ecb action. this comes after the snb did say the swiss franc was overvalued. jordan saying over time having interest rates and global monetary policy normalize will make it easier for the snb. we will speak to thomas jordan later on today. carolin roth will bring us that interview. >>> u.s. prosecutors are hoping to reach a criminal settlement with volkswagen more than a year after volkswagen admitted to emissions cheating. the federal prosecutors are said to be eager to reach a settlement before the end of the obama administration. as vw attempts to move on from the diesel emissions scandal. market share was up in november compared to the same month last year. but the namesake brand market share was still down slightly. >>> and as promised, we're bringing you all the details of a new game coming from nintendo. they're bringing the favorite italian plu