guide as toseful where fed rates are going. inflation apparently really matters to the fed. it was flat in the previous month for the month of october. we were flatlined at zero in the prior month. that stays the same. some other data peppering the wires. income coming in flat at 0.0%. 0.3% pendingrom home sales for the recent month in october. that's a decline on a month-to-month basis. still growing. annualized rate of 3.9%. that's down from that eye-popping number we had the previous month where we saw a year-over-year number of six point 3%. kind of a mixed bag with regard to some of the key headline embraced. -- key headline numbers. inflation and a housing department that seems to be chugging along. guy: the real number that stands out throughout the day is the capital goods number. quite soft. months this time really picking up. that is a sign of strength coming out of the u.s. economy but i don't think people had anticipated and that's probably why we have seen yields rising at the front end today. these numbers confirm for the inflation story is going. we've been he

and the fed weighs in on brexit. it's starting to weigh in on climate change is anybody going to ask questions as these democratic candidates move forward, entire industries could be changed. doesn't that rise to a higher level than some of the issues with trade and their small impact on gdp? i would like to see some questions outside the box, because the box is protected >> that's a good point, rick steve, i'll let you in here, but that was a headline that got lost last week that they did raise the idea of integrating climate change in their policies. >> yeah, the fed is well behind the curve of most central banks in this regard if you read -- i think it was this week, maybe it was last week, i can't remember anymore but a big speech that talked about this idea that if it's going to affect outcomes for debt or the economy, then the fed ought to think about incorporating it i think it's a sort of logical idea i do think that rick overstates the case maybe a bit i think the fed is very careful not to weigh in on a bun

the fed is looking down the front end. people are feeling a little more rosy about what is going to happen with the economy. can i assume a steeper curve? michael: that seems to be the assumption in the market. it is just a question of how steep, how fast. the growth forecast and the inflation forecast that we get, even with the fed rate cuts, is not all that strong, especially for next year. there's a divergence of opinion about how fast it will grow, but nobody thinks it will even get to 2.5%. in that case, you probably won't get an overly steep yield curve, but at least you get out of inversion and take out that issue of is it simply link -- is it signaling a recession out of the pitcher. vonnie: michael mckee is staying with us. we will bring you jay powell's testimony as soon as it begins. let's get a check of global markets for the moment. here's kailey leinz. kailey: we recovered a lot of our losses. the dow is marginally higher. investors not to stirred by jay powell's released testimony, but we will see how the se

the fed of course is essentially the cause of the entire rise in the stock market since 20072008 the financial crisis they've been pouring trillions of dollars into their bodies on wall street and that's one of their buddies i was a really happy for me that's the opening bell out there so fed will not disclose which banks are receiving repo cash for at least 2 years this is our friends i gat the gold antitrust action committee out there in connecticut and they filed a freedom of information request with the fed they asked them who's getting this repo cash if you want to know which investment banks have been getting the infamous repo loans from the federal reserve bank of new york in recent weeks as gats a has wanted to know you'll have to wait 2 years according to a letter received from the bank today in response to gattis request for information a delay the new york fed's letter said as off arise by the dogs frank wall street reform and consumer protection act to get disappeared 500 to. all transparency has been obliterated all sound accounting has been obliterated. economic policy

the fed was actively involved. can you tell us what is causing the liquidity issues that are causing the fed to intervene? you said they were technical, and i am not disputing that, but can you tell us what is underneath that is causing that activity? chair powell: i want to stress that these are not things that will affect economic outcomes. rep. flores: i think you are trying to do the right thing. i just need to know what is underlying that is causing it. chair powell: we have been allowing the balance sheet to decline in size, and we stop that process in july. it really comes down to the supply of reserves, which are something we create. we surveyed all the banks and said, what is your lowest comfortable double of reserves? we put a buffer on it and thought we were well above the level of scarcity. then in early september, we had a situation where banks had much more liquidity than they said they needed, and yet it didn't flow into the repo market, where rates had gone up quite a bit. we are doing a lot of fore

the fed is saying everything is -- the fed is making a mistake. the market is saying everything is fine for now, so therefore reach for yield. that may be the way that you reconcile these two markets. gershon: the question is, if we get weakness, will further easing matter? the reality is, the problem in the economy was not the price of credit being too high. maybe it did impact sentiment, maybe the fed is more confident, but it is not like 75 basis points makes a whole lot of a difference in the economy. if we get weaker, will it make a difference if we cut closer to zero? jonathan: just wrap up this conversation, bob. quickly weigh in. bob: it does, because we have already seen mortgage refis are at a high level. so high, the treasury has reached its cap on what it can reinvest in the mortgage market. these drops lower in yield do create discretionary income across the board. consumer level, right now, corporate america, down the road. gershon: i agree, but how much more is there to go? what happens if we see more weakness? will further rate cut

so the financial community within the fed. we have a working paper out on the cleveland website that talks about the results that have tabletop. and it really is clear that when you get into a situation where, you know, financial instability issues come to play, we don't have many tools that we can actually use to address them. >> ben, there was some discussion earlier today about the importance of communecations in setting inflation expectations. and, you know, michael weber made the case that you really do have to worry about household and firm inflation expect tairks and just influencing markets participants and investors is inadequate. and he pointed out which i think we all know it's hard to communicate this stuff to ordinary people even the ones in the top half of the iq distribution. >> why are you pointing at me? >> you're in the top -- at least the top decile. do you think it's important -- does the fed have to worry about their ability to adjust consumer expect takes or can you get a long way there by the markets whi

fed is doing q.e. but it's not really stimulating the economy it's stimulating the bubble that's all that's happening and donald trump was correct when he criticized janet yellen for pursuing these tactics when obama was president and now he's applauding or actually still criticizing powell for not doing enough he wants negative raise he wants even bigger q.e. because he doesn't care about the u.s. economy all of this is counterproductive if you care about the u.s. economy all he wants is to make the numbers look better he wants to get the stock market to go up so we can claim that that proves that he has a successful presidency but the reason the fed is pursuing these policies is because his presidency is that big a failure as obama's and get your last word on this because we're almost out of time but what are your thoughts on that because obviously connecting not only the fed to interest rates and and the printing of money but also to unemployment the fact that they have this dual mandate that really

. >> the fed is in a good spot. >> i don't think that the fed does anything differently as a result of this other than pat themselves on the back. >> a pat on the back. >> this is like a picture perfect soft landing is what they're on track for. >> joining me around the table, bob, prima and gershen. to begin with you a solid payrolls report. i thought we would make this show by making up excuses for a weak jocks number. we we have a strong -- jobs number. >> i don't think this number told us a whole lot. we've known the market is strong. is slowing, but i think the big question is is the slowdown is a manufacturing slowdown, is that having an impact on the labor market? not yet. it actually solidifies this. i'm not sure the fed is done because at some point when businesses have cut back they're going to have to cut back on hiring. >> you think the jury is still out on the economy. >> i think it is. global growth continues to be weak. the china numbers not showing the big rebound. we haven't had any stimulus. go back to what chairman powell said no business executive has gone to him sa

lots of concerns around the fed and trade.on the table suggest that the smart people behind this deal think it is relatively healthy. if we go into the bloomberg and use the function, you can see where we are at. on the year they are at a record high above $2.2 billion. out of the financial crisis going in the right direction. it suggests that these management teams think it is healthy enough to make this combination. there are still many folks saying that 2020 or 2021 could be difficult. showed we are looking at a huge ramp-up in 2006 and 2008 than a huge drop-off in 2009. some management teams want to get deals done while it is healthy out there ahead of the possibility that things could get tighter. right now it looks pretty healthy. especially the fact that you are seeing these kinds of deals happening. vonnie: that is abigail doolittle with our stock of the hour. guy: just to recap what we have been learning from the fed. we had this meeting taking place between treasury secretary mnuchin, chair powell, and the president

then a slew of fed speak, including fed presidents kashkari, evans, williams.rsday, a rate decision from the bank of england. friday, inflation numbers out of china. still with me are bob michele, gershon distenfeld, priya misra. china says it has achieved consensus in principle with the u.s. in a phone call today between top trade negotiators. how do you characterize the story between the u.s. and china? what amazes me is how assessments of the global economy seem to change from week to week based on where we are in the trade talks and from one data point to the next. priya: i think there is an assumption in the market that global growth weakness is because of trade. i would argue the weakness started before the trade war. the trade war has not helped, but if you think it all hinges on this u.s. china trade deal, that is why a lot of people are getting whipsawed. when i look at the headline, it is saying in principle. i thought we had this two weeks ago. it will be agricultural products, no rollbacks of tariffs. if i'm a corporate and i'm thinking about my sup

we've got inflation near the fed target. not exactly 2%, but still relatively elevated compared to other developed markets. why should we be so pessimistic about the outlook for next year? it might not be that bad. that is what you are seeing in investor sentiment today. kathy: i would agree with that. we seem to be in a good place, as jay powell said. that is translating into ceos and cfos saying this is an opportune time to borrow, rates are low, we can borrow long-term at low rates. why not do it? jonathan: some investors are liking what they are seeing as well. collin robertson catching up with our team and saying the following to them. "i expect 2020 to look like 2019, 2018, which saw far more high demand than the bonds issued. there is a lot of opportunity in ccc right now, you just have to find the right ones." if you could only see kathy jones smiling as i read that. kathy, ccc's. kathy: we are certainly staying away from ccc's because of the risk and reward. i know spreads have widened against the rest of the univer

in particular, the fed has fed listen number of events around the country, including an historic conference feedback on to hear current policy conduct as well as to better understand the monetary policy at the local level. not only will these initiatives in the federal reserve and in its ecisionmaking, they'll provide important information relevant from etary policy americans who do not always get a seat at that table. in the past, haven't been able to understand how these they operate as well as are able to today. our witness.oduce mr. powell is the 16th and current chairman of the board of federal reserve system. serving in that role since 2018. e first joined the board of governors in 2012. prior to his appointment to the board, mr. powell was a visiting bipartisan policy center where he focused on federal and state fiscal issues. powell previously served as an assistant secretary and as ndersecretary of the treasury under president george h.w. bush. with responsibility for policy institutions, the treasury debt market, and related areas. prior to joining the worked as a n, he lawyer and

did the fed manage us into this part of the cycle? ellen: the fed has a job to do.hey can see the economy is growing at 3%. they can't have that. if their job is to extend expansion as long as possible, it also includes not allowing the economy to overheat. so they are out there doing their job. they hiked four times. we can argue, and will continue to argue for decades, whether they should have done that final hike in december. at the time, they felt they had reached neutral. that monetary policy was not too tight, nor too easy. but the problem is that doesn't really exist. it is like being in purgatory until you know which way you need to move. if neutral does exist, you are not there for long, and changes in market conditions can easily drag the fed away quickly, and that is what we saw happen after that last year. theye: do they feel like have more power over the likes of the fed, the likes of even the administration, than maybe once before? right now, the 10 year yield in just one week has gone from 1.86% to 1.69%. ellen: it is always going to feel like the mar

chris dodd and barney frank did the dodd frank act well here we have the fed using the dodd frank act which was supposed to help the citizens of america and give them some sort of transparency from ever being on the hook for another 141-516-1718 extension 1000 dollars for bailing out the banks well he's using the new york fed is using that as an excuse why they don't actually have to show this data set of cloak and dagger as cloak and easing cloak and easing mystery no we're not going to tell you anything having to do with this massive bailout this ongoing massive bailout that we're calling a repro function down there in eric fed and elsewhere not going to mention the fact that there's a like the whistleblowers remaining anonymous the recipient of this huge bailout even though everyone knows who it is j.p. morgan we can't say anything about that in fact some of our guests have said it's deutsche bank because deutsche bank is one of the member banks able to access the fed's repo. and oh so we don't know which bank it is many say it's j.p. morgan j.p. morgan of course that is flush with

the feds repos a member in gold as $2000.00 an ounce. the feds repos operations are rapidly increasing in size and scale should we be operations are rapidly increasing in size and scale should we be alarmed at what's going on we don't know exactly or be alarmed at what's going on we don't know exactly or are those actually but it's obvious there are some insolvency there's banks going to liquid the need to borrow those actually but it's obvious there are some insolvency there's banks going to liquid the need to borrow and no one wants to go to the discount window of the fed for the borrowed money blasters are 0 and no one wants to go to the discount window the fed for the borrowed money of last resort means something is drastically wrong so let's unpack on a bit now the worst it or that means something is drastically wrong so let's unpack on a bit now the worst is saying there isn't a solvent sitting there somewhere in the system right and so why would they just saying there's an insolvent thing somewhere in the system and so why would a

is desperately trying to cover it in the repos market and the fed is desperately trying to cover it in the repos market which is like trying to put that fire in california with a squirt gun so the find it which is like trying to put that fire in california with a squirt gun so the final settlement of a transaction that's that's cash that's gold that's big queen there's no count. party risk settlement of a transaction that's that's cash that's gold that's big coin there's no counterparty risk these people in the financial markets do not want to swap that for these people in the financial markets do not want to swap that for any instrument with a counter party we're seeing huge rock any instrument with a counterparty we're seeing a huge run on the counterparty market nobody wants any any sort of instrument with a counter party and on the counterparty market nobody wants any any sort of instrument with the counterparty it would seem during the 192221 recession the decline in the monetary base it would seem during the 192221 recession the decline in the monetary base eventually made it

system that the fed has created is we've kind of covered the story the fed is coming out with this new data and this is them being transparent and apparently just like much of the democratic party like they don't realize that their it's like a let them eat cake moment that they don't realize how they just don't get it they don't get the rage and the anger of the population they're going to say it's a conspiracy it's kaiser or it's causing them to be angry or not this data so well street looks at that data and they find the how the fed boosts the one percent even the upper middle class loses share of household wealth so the one percent bottom half just get screwed ok the federal reserve just came out with its quarterly data on the wealth of american households as mostly they have by numbers that are being displayed in the media how much wealth american households have namely our new record of $107.00 trillion dollars thank you fed to eat interest rate repression and wealth effect but the fed's data also shows the wealth distribution the bottom half of the population bottom entire 50 per

u star is probably lower than the fed thought a couple years ago. that gives downside. they did fall to some extend which is probably part of the reason inflation has been slow to come up. having said that i think there are a lot of points made today. for example, the fed underestimated how far the labor market could be pushed. u star is probably lower than the fed thought a couple years ago. that gives some scope for further expansion in the labor market. some of the points that kristin made about the global factors that kept inflation from falling quite so much after the panic, i think, are relevant and the transmission of that to prices. in any sort period it's going to be a bunch of idiosyncratic factors and others that are relevant. over the longer period i i do think the change in the monetary policy is the most important thing but the other things are relevant too. paul, what sense do you >> make of all this? >> yeah. maybe the most important thing is that we actually basically understand the economy a lot less well than we thought we did, wh

basically, the fed is on hold. monetary policy as it stands now, quote likely to remain appropriate. that would be the biggest deal i think he said there going on today. other things he said, the economic outlook is favorable. likes what e he sees right now the risks are from the global slowdown and raid wtrade war an cal policy is unsustainable. be preparing to help out the fed has less ammunition. not surprisingly dems and republicans are joined together in wanting, i'll get to that in a second, guys, i want to, hold that for a second. i want to get to the quote from the chairman in which he said you know, how far should we let it go? let's be humble. >> i'm very open to the idea that we don't knowprecisely is we have to have f significant humility and we have to let the day speak to us. the data are not sending any signal that the labor market is so hot or that inflation is moving up or anything like that. >> uyou feel like you're in a petrie dish? an experiment. now i want to show you fed probable ties which ar

in particular, the fed has conducted a number of fed listens events around the country including the historic conference held in june to hear feedback on current policy conduct as well as a better understanding of the effects of monetary policy at the local level. not only will these initiatives promote trust in the federal decision-making, they will provide important information relevant to monetary policy from americans who do not always get a seat at that table, and in the past have not been able to understand how these things operate as well as they are able to today. i will now introduce the witness. mr. powell is the 16th and current chairman of the board of governors of federal reserve. serving in that role since 2018 here he first joined in 2012 prior to his employment. scholar at theng bipartisan center focusing on federal and state fiscal issues. he previously served as assistant tecra terry and undersecretary of the secretary under president george h w bush with responsibility for policy on financial institutions, the treasury that market, and related areas. prior to joini

let's go back to the fed.lier, you were saying that you thought the fed would have to start hiking again. in 2020. in a cut how can the fed manage that change without causing dislocation in the bond market particularly? paul: going into 2019, everyone was expecting more hikes. then we got more cuts. the bond market will move around. i think what was very clear in that conversation, the neutral rate. we are well below. they believe we are at an accommodative stance and below neutral. the economy is more robust than is expected. they will want to at least get up to neutral. the market will start to price that in. that is what we have got to think, as fund managers, where is it going? i think they would eventually move for that, economic data. of trade some sort deal, the market will start to press that in. nejra: you are underweight bonds. what is your position on equities? manus: we are underweight --paul: we are underweight equities as well. u.s. equities but overweight more of the -- the asian emerging-market

so it's sort of the walk of shame to go that ask the fed and to borrow i have to go to the fed so it's sort of the walk of shame to go that ask the fed to borrow money when another bank or other banks won't do well in this is borrow money when another bank or other banks won't do well and this is happening again and again and again as you will then very day that we get the same and again and again and again as you will remember a day that we get the same message that we need to extend and so now your feeling is that this pertains that we need to extend and so now your feeling is that this pertains to one institution in particular that is not being named at that is that one institution in particular that is not being named that is having trouble. staying out of insolvency could be but having trouble. staying out of insolvency could be but it's immaterial in a way because all these banks are in strip completely interconnected which means there's material in a way because all these banks are in strip completely interconnected which means if it is just one and it goes fall. then it hits to

to be getting worse and worse what is the fed intervention business appears to be getting worse and worse what is the fed hiding the longer this goes on and the bigger the interventions get the more my confidence is hiding the longer this goes on and the bigger the interventions get the more my confidence is shaken i expect that's true for other investors too and he was responding to a tweet from shaken i expect that's true for other investors too and he was responding to a tweet from brad houston about the fed temporary repos on september 7th rather houston about the fed temporary repos on september 17th they said we're doing repose today and tomorrow on september 19th they said we're extending repose and they said we're doing repose today and tomorrow on september 19th they said we're extending repros until october 10th 75000000000 overnight 30000000000 term and then on article october 10th 75000000000 overnight 30000000000 term and then on october 4th we're extending repos into levon 141011 or extend repos until january 2022 before. we're extending repos into levon 141011 works a

. >> in the overall fed cycle, we would anticipate the fed should steepen somewhat. >> you're seeingate market cycle behavior. part of that is a flatter yield curve. the economy will run hot and it will keep the short and suppressed, which everyone expects. >> a market priced for recession, but it is telling you there are no risks whatsoever. that is not a tenable situation. >> the launchpad controls are in the hands of politicians right now as opposed to central banks. >> if you see these deals go through, you could see a steepener. >> if it happens, we think you create the conditions for an upside to expectations on inflation and we think it gets manifested in the yield curve steepening. lisa: joining us from london is iain stealy from jp morgan, and james athey from standard investments. in new york, ian lyngen from bmo capital markets. we have seen a shift with a growing number of strategist saying they expect the yield curve to steepen next year. what is your take on that? >> good to see you again. essentially we've been running the steepener all year. it's essentially the combi

you can have a pretty quick turnabout by the fed.onathan: are you implying i had an opinion about a policy decision from the federal reserve? everyone is sticking with me. coming up on the program, the auction block, featuring the biggest investment grade debt deal of the year so far. abbvie is coming up. this is "bloomberg real yield." ♪ ♪ jonathan: i'm jonathan ferro. this is "bloomberg real yield." i want to head to the auction block and begin in europe, where the primary market is showing few signs of calling. deutsche bank raising 500 million euros, helping weekly sales to pass 30 billion. no shortage of supply on this side of the atlantic. the junk-bond market set for its busiest week in two months. finally, the big one, abbvie selling a monster $30 billion in bonds to finance its acquisition of allergan. big demand to buy a piece of the biggest debt sale so far in 2019. it took the supply to roughly $50 billion, the second-biggest week of 2019. >> rates are cheap. why wouldn't you raise as much as you can? there are flows into

the feds repo operation. but gracious christians are saying in the police and increase in size and scale should we be alarmed at what's going on we don't know exactly should we be alarmed what's going on and we don't know exactly who those are actually but it's obvious there are some insolvency there's banks going to those actually but it's obvious there are some insolvency there's banks going to liquid the need to borrow and no one wants to go to the discount window of the fed for the liquid they need to borrow and no one wants to go to the discount window of the fed for the borrowed money of last resort means something is drastically wrong so let's impact on the bad guys that are not borrowed money of last resort means something is drastically wrong so let's impact on the bad guys that are now the worst is saying there's an insolvent thing somewhere in the system and so one of our son is saying there's an insolvent thing somewhere in the system and so why would and they don't want to go to the discount wind

as far as those fed minutes that came out it's exactly what has been telegraphed by the fed over the last week or so. they feel we're in a good place when it comes to monetary policy, i think the bar is very high for them to raise rates >> i hate the expression is that a goldilocks environment for stocks especially as we're seeing the yield come down? and really stay within a manageable range here? >> i think as long as the u.s. economy does not go into a recession, we continue to be in a good environment for the equity markets the fact that we're going into an election year next year as long as you don't have a recession. the market historically has been up about 90% of the time in an election year. you have a favorable market environment for equities going-forward. >> the president met earlier this week with chairman powell afterwards he said, i pointed out in his screw, interest rates are too high they're keeping the dollar too high that is hurting manufacturer's and growth a strong dollar does make u.s. exports more expensive and less affordable in foreign countries. there's his

pressure on the fed is having real-world consequences. it shows that it reacts every time you're pressured. and with the change of expectations that the fed's interest rate target will drop. mr. powell, can you tell what actions you're taking at federal reserve to not only insulate against political influence, but to signal to investors that the fed makes independent decisions based on sound economic analyses? >> thank you. so politics plays absolutely no role in our decision. we use the best data, the best analysis we can muster. we're human. we'll make mistakes, but won't make mistakes of character or integrity. so, i am familiar with na research and i would just say i think it's very hard to look at, you know, our incredibly complicated financial markets and economy where many, many things are driving results and pull out a one or two tiny effects, that there's other research that points to different results, but i would-- it's absolutely essential that everyone understands that we are doing our jobs as we always have without regard to

jonathan: the fed pause is underway. i wonder how long it will last.ll get to the final rapidfire round. let's begin with the first question. do we get something referred to as a phase one deal by this administration before year-end, yes or no? krishna: yes. samantha: no. robert: yes. jonathan: when to buy the u.s. 10-year, now, wait until 2.25, wait until 2.50, or 2.50 or more? now, wait until 2.25, wait until 2.50, or 2.50 or more? robert: better safe than sorry. 2. samantha: no timing. if you need duration, buy it now. krishna: 2.25. jonathan: if you have to allocate capital on a regional basis to risk assets, europe or the united states? europe or the united states? robert: that is a tough question. europe. krishna: u.s. for credit, europe for equities. samantha: allocation, u.s. if you want to be tactical, europe. jonathan: great to catch up with you guys. from new york, that does it for us. we will see you next week same time, same place. this was "bloomberg real yield." this is bloomberg tv. ♪ sometimes your small screen is your big screen. and

have we passed peak dovishness for the fed in the u.s.? melanie: i think the fed are on hold. a strong message from powell, and we will see if that's in the minutes this week area generally speaking, the u.s. economy is in a better place than it was. we hadbeen slowing, but significant stimulus from the fed that should serve it well going into next year. anna: good morning, melanie. a good place, the fed keeps telling us, their new phrase. we heard from president trump once again criticizing where u.s. interest rates are in relation to other countries. giving ourselves the context, a chart to show, the uptick in u.s. rates, but the extent to which they have also been cut. melanie: it is important to note that the turnaround has been bigger than it appears, looking at what has happened. anna: because of the balance sheets. melanie: and also, this time last year we went through a position when the fed was signaling they would continue raising rates. since then, they have cut rates several times. quite a turnaround. you can see it in the housing market, helping to boost activity,

david: let's go back to jay powell's testimony, the fed chair. he did not say much about monetary policy saying if things keep going well, then we are in a good place. but one of the issues that has come up including in jay powell's testimony was the trade uncertainties. we are from president trump yesterday about the china trade a deal and one of the issues that came up was do we know how strong the chinese economy is. this is in part what was said. powell: i think it is difficult to understand china. it is very hard for me to really feel like you understand the way the economy works, the way the society works. i think you have two, as a general matter, just except that it is hard to know. david: it is very hard to know what the chinese situation is. president trump tells us that they really are struggling and he has the upper hand. do we have a read on the strengths of parties in that dispute? terry: short answer, no. personally,mption, i think it is a reasonable assumption, whatever the chinese are telling you, you should probably shave off an

we have already priced the fed out of the market.rishna: we are getting monetary stimulus, it is the expansion of the balance sheet. the non-qe qe taking place in the marketplace. they can call it whatever they want. it is stimulus. if you expand the balance sheet by $50 billion a year, call it whatever you want, it is stimulus, for its impact on the various channels. jonathan: is it stimulus if it focuses just on bills? krishna: it is not stimulus if it focuses just on bills, if the curve is really steep, because of term premium. term premium, again, is nonexistent. if the curve is a steeper it's because of inflation expectations more than term premium. in that regard, the impact of stimulus is going to be minimal anyway because term premium is low. that is what is unfolding. robert: i think you are right, that we have had a sea change. you rewind 6-12 months, ecb thought that they would be done buying, could be raising rates, the fed was raising rates, rolling off their balance sheet. the bank of japan has been kind of constant in

this morning i'd like to start with you and take it back to the most recent fed meeting.hey seem to signal that they are coming to the end do you think the midcycle is over in the u.s. >> the correct answer to that is who knows. they are sending a signal for the time being the challenge has been the communication has been some what irrattic and it is hard to know under the terms and conditions they might act in the future it is a problem for the fed and the markets and public and not knowing under what circumstances will they return to easing or return to rates again. >> is that the function of the decision making that has also been quite irrattic when it comes to decisions on the trade war? >> i think both now. one of the problems is that the fed's communications about why it was easing had a lot to do with the potential for a trade war and the negative effects which hadn't really occurred yet. i would prefer them to take an action if they thought inflation was too low. at least that is data they could see. i would probably disagree with that too this notion of making a

if the fed will be on hold, it may not be that bad.hat is what you are seeing in investor sentiment today. kathy: i would agree with that. we seem to be in a good place, as jay powell said. that is translating into ceos and cfos saying this is an opportune time to borrow, rates are low, we can borrow long-term at low rates. why not do it? jonathan: some investors are liking what they are seeing as well. colin robertson saying, i expect 2020 to look like 2019, 2018, which saw far more high demand than the bonds issued. a lot of opportunity in ccc right now, you just have to find the right ones. if you could only see kathy jones smiling when i read that. kathy: we are certainly staying away from ccc's because of the risk reward. i know spreads have widened against the rest of the universe but you are still not getting enough yield to compensate for the risk. frankly, every fund manager you talk to says there is some risk there but i have the good bonds, and it's not a problem. at this stage, we don't think the risk reward is that attract