the fed has had trouble hitting 2% on inflation for many years, so the fed has said now we don't wanthit 2% every year. we want to hit 2% on average. so if we underperform for a bunch of years, we need to have inflation above 2% a while in order to keep inflation expeditions around 2%. that is what this whole shift is designed to keep inflation expectations anchored at 2%. tom: well explained. demographics and population with the history of your institution, if we assume a assumenominal gdp, if we a more dampened economy, why don't we just lower the 2% target to 1.9% or 1.8%? when i do that? bill: the reason why the fed wants to have an inflation target of 2%, not lower, is they want to have enough room in an economic expansion to have the nominal interest rate high enough so that there's enough to stimulate the economy and get the economy out of recession. let's say the inflation target was zero. in the short term fund rate at the end of the cycle would be 2% or 3%. there wouldn't be much room to cut rates, and therefore there wouldn't be much way to stimulate economic activity. lisa

the fed will look forward on that.he point that yelena just making, i am not sure it will be formula based in this case. in the actual statement, they used the same language that jay powell did, saying they would allow inflation to run hot for some time. i think they are giving themselves a real out here, the idea they are giving you the market and idea it will run hot, but they do not want to be tied down to any particular number or time period. i go back to the old supreme court definition of pornography -- i don't know what it is, but i know it when i see it. that is what they want to keep doing. guy: roberto, where do you think that number is? roberto: i completely agree with michael -- they want to be flexible and they do not want to tie their own hands. 2% fore have been under a long time. period of a hope inflation will be over 2% will be measured in years, not quarters. 2.5% is probably reasonable. there is a committee that probably have at least 34 different opinions on what the number is. i think that is a re

is our banker fed what do you make of this. well you capture very well in the introduction rick the. of the like unfortunate like many patients to succumb to multiple co-morbidities the u.s. economy before coronavirus hit also had several co-morbidities that it was suffering from endless bubbles we saw it in a way that bubbles coming to fruition again and we saw at the end of last year as you pointed out the carry trade with other banks so the economy was already very very ill cope with the virus hit and like a lot of patients it's really threatening to kill the economy entirely the fred the fed has a magic button over which is printing money out of thin air and thus far as you point out it's done to the tune of about 3000000 here domestically and how many billions hundreds of billions overseas that it's lending it's ironically it's actually seeing the death knell of the u.s. economy as some sort of an energy drink for the fed to enable it to expand all over the entire universe it really doesn't make any sense whatsoever now it

card, the fed independence card. to make sure that they are seen as nonpartisan, not being influenced one way or the other. there's the pressure to hold true to what they have said before. that fed officials want more fiscal spending. they want some sort of deal. they can be debated whether they blame the lighthizer democrats for not getting to that point. we expect to hear that message. there's more to be done on the fiscal side. perhaps they are not on board with the read of mike pence and others that are saying that the economy is on a pathway stronger recovery. you've heard a much more pessimistic tone from the fed officials. manus: indeed. larry kudlow on a 20% recovery and a v-shaped all the way. good job on the road quest. what we can expect. don't miss our interview this afternoon with the st. louis fed president, friend of the show. let's get your first word news. laura wright is in london. laura: thanks. tona says it will select audit sensitive mainland companies. [inaudible] the vice-chairman of the chines

i joined the fed five years ago. if you asked me and my team what was full employment, we might have said 4.5, 4.75% obviously that turned out in hindsight to be high we were able to pull in a whole range of underrepresented groups, lower-income groups. so this reflects that maybe our views on full employment are more imprecise than we might have thought and we may have the capacity to run hotter, and we're at least even to that. that's the reason for shortfalls, and it also highlights the importance of getting underrepresented groups into the workforce, and the long-term benefits that can have on wealth and equality, and having a stronger economy with a stronger labor force >> president kaplan, it's kelly here if you could indulge me in a quick question. >> of course. >> there's a lot of folks that aren't worried you'll hit 2% inflation, so the market reaction is somewhat muted -- i should say the bond market my question is about the stock market and the concern that it's frothy >> in the last ten years inflation ha

in,ong as the fed is stuck even without an average inflation target, we know the fed will not hike ratestime soon. that has further to run. tom: i want to play off jared kushner talking about the president's speech tonight. i want to talk about a hopeful america. jared kushner says the president will speak of a "hopeful" america. how does jay powell do that. how does he generate a hopeful message today when i have a number of leading economists looking at double digit unemployment coming down slowly? do andit will be hard to it is probably not in jay's best interest. he will want to keep the pressure on congress to come up with a fiscal stimulus, which probably will not happen until september at best. you could look to some data points like retail sales, durable goods, which improve. the problem is the high-frequency alternative data sources suggest this recovery is already petering out and it could turn into a downturn if we do not end up re-updating some of the fiscal stimulus. tom: megan greene, thank you so much. bond breaking out under 140. some of the tension indicative of what we

the fed chair delivers remarks thursday at the fed's annual economic symposium usually held in jackson hole, wyoming not this year. so i guess no fishing for you, steve. last year was the trade war that he was going to comment on. >> there was never any fishing >> sorry no fishing and no live music either, right? never. >> you need to get your story straight on that. >> sorry >> it was work all the time. >> i'll fact check that. last year he had the challenge of the trade war to sort of navigate around. this year it is a global pandemic what do you think he's going to set the table for? >> well, i think he's going to set the table for all of that. he's had a pretty consistent message on that, which is i think that the markets and the policy makers need to hope for the best and plan for the worst. the fed has been pretty consistent on this, melissa, that the possibilities of worse outcomes are at least an even chance he has urged, fiscal aside, to get ready to do more while at the same time saying the fed is wide open. there's a broader thing going on, which has to do with this strategi

kaplan of the dallas fed as well. i want to talk about a small business, and by that i only mean 9000 employees. this is spirit airways. gete are the suggestions i that the airline business has cratered. the bottom line is 20% to 30% furloughed speaks to the fragility out there as we go into the friday jobs number. jonathan: they've got to cut the size of the business. these companies are starting to right size for the reality that things aren't going back to normal anytime soon. something that stuck with me for the last three weeks is a quote from jp morgan's jamie dimon, when he said the following. "this is not a normal recession. the recessionary part of this you are going to see down the road. you will see the effects of this recession. you are just not going to see it all the way but -- not going to see it right away because of the stimulus." that stuck with me. tom: what is so important is our focus on somebody who employs 800,000 people or 260,000 people. jon ferro, this is about small business like this airlin

support curate tom: -- on fed support.t is a victory lap for mark kiesel. i have visited newport, you guys, with the leadership of bill and mohamed and following pimcoer the train wreck, has been dead on about a low rate regime. do you maintain that low rate regime or could you see out two years, five years, 10 years where we get back to the normalcy chairman powell desires? mark: we think we are probably closer to the lows in rates comment that is simply because we are going to get, we think, a big fiscal push. it could happen after the election. monetary policy is going all in. the fed has been supportive for markets. we think with the mobility data will improve, the economy will start growing again. if we get physical infrastructure spending with the democrats, we could see a much steeper curve and could see higher rates. i think we are closer to the lows, even though we did think rates would come down. now i think we are suggesting with the economic recovery and all of the fiscal and monetary policy support at could go

but when asked by reporters, the spokesperson for the fed denied that the fed had made any adjustments of consideration for the oil and gas industry. instead, the fed said that the april changes reflected the more than 2,000 public comments that the fed had received by the -- about the initial design of the program. so president rosengren, as the regional fed president responsible for the main street program, do you stand by the fed's earlier statement that certain adjustments were not made specifically to help oil and gas companies? mr. rosengren: i do. this is a broad-based program. it's been a broad-based program from the start. 13-3 facilities require broad-based kind of terms so it's not targeted at specific firms or specific industries. 13-3 facilities are not available for that kind of lending. mr. ramamurti: thank you. i want to focus specifically on the changes that were made to the facility in april. let's look at one of them. according to reuters in mid-april, one of the key changes the energy secretary and treasury secretary were pushing for to help the oil and gas industry

joe: let's talk fed, because it is jackson hole how much has the fed so far contributed to this recoverye fed start to more -- start more meat on the bone, their approach of what the next phase of forward guidance would look like in order to foster this recovery and market rallied? neil: i don't know if they have to. i think they want to. lowously, rates are quite they are likely to remain that way for the foreseeable future. that is one of the reasons why committee members have been leaning against the idea of control and things like that what i will say is that it is probably prudent for them to introduce some kind of forward guidance. i think tying interest rates to a macroeconomic variables like inflation makes a lot of sense. things like average inflation targeting. what the fed is trying to do is build opportunities on the front end of the yield curve. you don't want the situation where markets are pricing in a full tightening cycle at the first whiff of inflation. ,omaine: that is neil dutta head of u.s. economic sent renaissance micro -- renaissance macro research. ae the fed's t

that is always a good thing for like the fed, particularly the fed. to seek accountability, not just going through the motions but really actively explain ourselves as clearly as possible to the public and the public representatives. in that sense, i think it has been a success. i think, really, the changes to our framework, time is really going to tell, and it will decide the effectiveness of the changes we have made. i think it is a promising set to deal with what is a reality of a quite difficult macroeconomic context of low inflation, low relatively low productivity, slow growth. it is not a phillips curve. you have to put that together and you really got to work to find every scrap of leverage in helping stabilize the economy. our actionsll, and will ultimately tell. i am grateful to you and to be a part of a great organization where they used every part of the organization to advance the project. i'm very grateful to be part of this. susan: thank you, chair powell. it is really a pleasure to speak with you this morning here. i would like to cong

the fed is upping their purchases and they are pushing that yield down, so absent the fed it is more like -50 basis points. so with the fed supporting the marketplace, it is something that we watch. it could have negative implications in the equity markets. taylor: i want to move on to the final spread, which is the week ahead. next week, the republican national convention is kicking off, consumer confidence on tuesday, durable goods on wednesday, president trump speaking at the rnc, and jay powell will deliver a speech on thursday at jackson hole. thursday, anything surprising after the fed meeting minutes that you expect to hear from jackson hole? greg: we really don't. i know they are going to talk about policy framework. they talked about averaging, looks like they backed away after the july minutes. there is not much of the fed can do after the heavy artillery of march, so anything going forward will be small. i think the fed wants to wait. taylor: rapidfire, three quick questions. i am putting you on the spot. yield curve control, september or 2021? greg: 2021. taylor: high yie

but if you just sit back and look at what the fed is doing, we think the fed will expand its balance sheet by 30% of gdp. that would be 1 1/2 times q/e one plus two plus three combined and on the fiscal front, we're expecting the deficit to be about 27% of gdp in 2020 so there's a huge policy support that is coming in the way -- coming to support the economy, and more importantly, as you have seen, even the second wave of infections rising did not really stop the economy from growing. and we are seeing that in the last few weeks, as new cases have come down, economies continue to gain further momentum look at the credit card spending data, auto sales, as well as what is happening to restaurant activity >> steve liesman, markets notwithstanding, still doesn't look like a v-shaped recovery for main street as you've told us i wonder if you have any thoughts on what this announcement from the fed might mean at that level particularly maybe for local leaders asking the federal government, congress, for funding for things like schools you know, in lieu of doing things like bond issues. >>

fed chair powell will speak at jackson hole today and how the fed will handle the look at inflation. we'll get into that after the break. >>> welcome back to "street signs. i'm julianna tatelbaum with karen tso. hurricane laura makes land fall in louisiana as a category 4 storm. >> this has been categorized as an unsurvivable storm surge where it will be hitting that surge could continue inland for about 30 miles >>> european markets in a bit of a holding pattern with the fed signaling a major policy shift on inflation as they meet virtually at the jackson hole symposium. stay tuned for more on all the top names. >>> wpp agrees to pay dividend despite slumping revenue >> racial tensions peaking with tensions in wisconsin, vice president donald trump >> you won't be safe in joe biden's america. under president trump, we will always with those who stand on the thin blue line we are not going to defund the police, not now, not ever. >> let's get a check on the european markets and how we are trading about an hour and a half ahead of the session a little bit of a holding power. we have t

it is really dependent on the path of the fed and it is really extreme. alix: you set us up perfectly for the next segment. we will be diving into that and how this is sustainable. peter fisher of dartmouth will be sticking with me. we will take a look at yields and valuations. this is bloomberg. ♪ alix: live from new york, this is "bloomberg markets." two thirds of the way through earnings season. we are waiting for media and retailers. scarlet fu has the latest. past thewe know we are hump of the season we are talking about retailers. we have a good glimpse of what we can expect. damage has been done to retailers in the second quarter. posted a loss as overall sales fell 50%. down 93%, wholesale. that is sales to department stores. a hit after bars, restaurants and arenas took a hit. almost $8 billion lost. a $6.7 billion write-off. gamers delivered. grand theft auto adding the second most users ever in a quarter. coming up this afternoon, disney is reporting revenue falling 39% in the quarter. beyond meat is excited to report a loss. and nickelodeon --

i think right now the fed is in a good place why is the fed buying bonds apple and amazon it is high quality bonds you're saying who is a favorite company and not a favorite company. we want to make sure that financial markets and corporate bond market is functioning so that healthy companies can raise the money they need. i'll give you an example in march when the crisis was in full swing and people were fleeing and they just wanted cash, you were seeing bond markets starting to dry up and what we didn't want to have happen, we into you that airline companies and hotel companies were directly aekt iffffected be coronavirus. we didn't want to have companies that were sound not be able to raise money just because markets were freezing up so the fed introduced numerous different liquidity facilities to get these markets functioning again. and we would much rather provide broad base support that's why we're buying against the indices. >> we were just talking about racial wage gaps we could have been talking about stimulus also. it seems to me that congress keeps asking the fed to do thi

>> when fed chair j. powell came to the job in february 2018, he expressed respect for economists in economics but skepticism. his biggest beef, how key economic theories didn't work so well in practice, ideas like the neutral interest rate or ourstar kept changing. unlike is unlike celestial stars, he said, these stars move unpredictably and cannot be observed targeting announced yesterday by the fed came after 15 fed listening events and it reflects 17 members of the federal market committee. but it's also the result of the evolution of powell. the fed implemented inflation targeting in 2012 under then chairman ben bernanke, leading policy expert. but powell began to see an inherent flaw. the fed will always see inflation and never hit the target the fed was always chasing its tail powell and the fed are hoping to try to convince the public that inflation can rise to the target and above it in order to average 2% over time the other big change announced yesterday also reflects powell's observation of ho

, don't fight the fed.h liquidity, you have to be in the markets it's a swift path higher is there any concern on the part of the fed thatthere is an asset bubble forming in the stock market that is being fueled by fed policy that's a perception that the markets have >> yeah, i understand the concern. and it's certainly something that we're very aware of which we're setting policy, that we have to look at financial stability risks including what's happening in the stock market and across markets i don't feel right now that we are engendering an asset bubble. i do feel that we're supporting the economy and doing what we can to make sure that financial markets continue to function and that credit continues to flow to both households and businesses we're going to be looking at financial stability issues as we do monetary policy going forward. yes, stock prices are elevated, and you're right to point that out, but again, overall, i think our policy is well suited for where the economy is now and where it's goin

the fed is definitely a part of this story, here what else do you think the fed might have in its quiver of arrows, if anything? i just want to address the point that a couple of people have made suggesting that fed is really pushing here and perhaps looking at the wrong things. most commodities, excess supply. you look at restaurants, services, apparel. we can come up with a long list. labor. there's excess supply of labor i don't see how there's all pressures that people talk about. jay powell is well aware of that there are more concerns immediately about price falling rather than price rising despite all the borrowing and the financing that the government is doing. that's the way we see it >> got a lot lightly the fed and everything else. do appreciate that thank you very much. >>> in the meantime, buyers keep on buying, what they have been buying technology staying red hot the nasdaq up another half percent. you have microsoft, qualcomm hitting new highs. stephen, you have the most tech exposure still every day with goe higher are you hanging on considering selling taking some profi

a lot of people trying to debate is the fed story now fully priced in. we'll keep rates lower for longer i think that mr. a big debate as we end this month and go into the fall >> thank you, sir. let's bring in steve for more analysis and reaction. >> the fed making a historic change to its monetary strategy. to become the first major central bank to put in place they have this 2% inflation. now it's a 2% average inflation when the fed if it needs to, if inflation runs allow to allow it to give moderately above 2% to hit that target over time. less than an hour ago on cnbc c with kelly evans, there is no formula to this. >> the new frame work says we're likely to let inflation run moderately above what does nod rmoderate mean? probably 2.25. you heard the i flags target was symmetric. doip i don't want to run persistently above or below for me that hasn't changed >> another major change the fed added to its statement it will be more concerned about unemployment being too high rather than too low. really rejecting this long standing connection economists

he is definitive on the theories of the fed. what is the theory of this fed? it is shifting to do whatever it can to support the labor market, to support minority and underprivileged groups within the labor market that have suffered higher unemployment rates over the years, and paying less attention to price stability. the good news is inflation is news is it puts too much onus on the fed, when as we know from what happened in the second quarter, timely is much more important to stabilizing the real side of the economy. tom: what is a statistic you have in your head for how much the stimulus should be? everyone says republicans are undershooting at $1 trillion. do you have a number in your head over the next year where the stimulus is going? could it be $5 trillion? john: i do not have a number because i do not know how the virus is going to play out and i do not know how the medical response, particularly the timing of the vaccine will play out. we need a physical bridge and a monetary -- we need a fiscal bridge and a monetary bridge. the economy has rebounde

fed chairman set to deliver opening marks.ted to introduce a new tool aimed at fighting low inflation and combatting the impact of the covid-19 pandemic. joining me now, scott, it is strange to say the lack of inflation is a bad thing but it can be why is the fed so concerned right now? >> thank you for having me when we think about the perspective, it is really indicative of the healthy economy where people's growth rates are glowing. you are earning more than inflation so you can spend a little more on economic growth >> let's talk about that real yield. interest rates are at that level. how does that dynamic play into how this plays out for americans to them in the coming months and years. essentially, we've seen benchmark interest rates on the deposit, they've all declined significantly. what we've found for most is that they would be considered a safe investment we call that the negative reinvestment rate the challenge is that many may have gotten used to that we've pushed many of those out to the core bonds. venturing in

name is esther george, president of the kansas city fed. i'm pleased to be joined by federal reserve chairman jay powell as well as many of my colleagues from the federal reserve and by other central bankers, academics, public and private sector economists and members of the news media. foras been our custom nearly four decades to welcome you to beautiful jackson hole, wyoming, part of the region served by the kansas city fed. returning forward to to that setting next year. format, instead of expressing my gratitude to those who travel around the globe to attend the symposium while managing jet lag, i will offer my appreciation to those attempting to manage local time zone where the current time now ranges from 6:00 a.m. thursday to 1:00 a.m. friday. this year has been an extraordinary one for monetary policy and central banking. many of the issues that we've talked about for some time including the low level of interest rates, the slow pace of growth, the effects of heightened uncertainty and how to effectively communicate monetary policy

we've seen the fed go down this path before. they're not doing it again we expect it would remain a part of the backdrop for the foreseeable future the one thing we have to give the fed a lot of credit for is, you know, there was no hesitation on their part we're happy to give them credit for that early on, it was that they rushed into the market to basically provide this liquidity, and to make sure the markets could function properly. i think they're doing everything they should. can you nitpick on some of the strategies should they have been rolled out a different way sure i think that's always true >> i guess it went back in a really rapid, as you point out, in a rapid way to the path that ben bernanke ablazed for them. thank you both for being with us we'll see you again. >>> back to steve liesman. he has a nugget from 9 fed minutes. hey, steve. >> a couple quick ones here. first, the staff outlook that informs the chairman's opinion and other members of the federal reserve quite a lot. they see a rebound in the second and t

the fed canthink get inflation anywhere close to 2%?f they can't, do you buy the long end in a way we have seen the markets sell it off over the last few days? how would you trade this? of athink it is more situation of textbook versus reality. you can't create inflation with words. side ofe employment things, if you look just strictly at inflation, there is no proven link between central banks using increasing balance sheets and inflation. look what has happened over the past 10 plus years since the global financial crisis. core inflation has been around 1.6%. we never really touched that 2%. the likelihood of being able to do it now particularly with unemployment is high, in the middle of a pandemic, this is going to be a longer-term situation but we are going to have more layoffs. we are going to have more cuts as a result of budget cuts. the fact is the fed is trying to provide a bridge throughout this pandemic to get us through it. once we are through that point, hopefully the economy can be on strong footing and hopefully we can b

ofcould lead to hundreds millions of dollars in damages, corn to a fed fort -- fed court filing.ial scan images of children, sending comfort -- confidential information about adults to china. tiktok's streaming app is under threat of being shut down in the u.s. would you suggest the growth of its data center business will slow. chipmaker is forecasting sales in the low to mid-single digit range in the quarter. that is down from a 50 port surge. -- from a 54% president trump has continued his attack on goodyear. he says he may swap out the goodyear tires on the presidential limousine. the president called for a boycott of the company after allegedly banning employees from wearing his trademark mega hats at work. goodyear asked that employees refrain from supporting candidates or polluted -- from that supportsn candidates. tom: equities, bonds, currencies, commodities there are some real nuances in the market. nicely after the six-day run of higher yields, the 10-euro tip come of the real yield statistic, -1.0131. that shows the pressures that are out there, the vix, 24.06. francin

that is what i learned at the fed. downsidee are few risks. the fed has taken these measures. do? it have less it can or is that up to fiscal? >> i think it's important the fed is not the only game in town. trillion inate a assets. around theies congress canhink never agree on anything. we cannot just go back to february. the world has changed for a variety of issues. and policy needs to not just try to restore us to what things look like in february but realize there will be restructuring and pain. -- we cannot go back to the past. that will not be possible. >> how much bigger does the balance sheet get? >> there really is no them into the fed's balance sheet. more than 100% of gdp, bank of japan, and my colleagues at the of now are only a fraction of thatughly a quarter balance sheet. there is a lot of room. but we see the bank of japan has less and less impact, and it is part of the reason the fed has done this now. . they wanted to get this out because they want another instrument, some broader guidance, changing of expectations instrument, a change in monetary policy framewor

course one thing you can point to this and say is that this is part of perhaps is dispute with the fed because remember he did want to bail out the airlines i in a way that would give him a good deal and a bigger percentage of the big 4 airlines in america but who outbid him that was the u.s. federal reserve they gave no strings attached to their free money to the airlines which is basically never going to have to be paid back so course warren buffett then dumped his airline shares and then down to banking shares in the 2nd quarter and while he was buying gold i'm buying back at half a $1000000000.00 with the barrick gold he and i want to point out that colombia a country you know they sold 2 thirds of their gold and june alone so you know they were getting out there's always down money and there's always smart money at the table so if you don't know that the sucker is at the table it could be you. you were right well you know the fed is out offering buffet right if it were taught fraud how to commit fraud to the central bank you put a lot of money in and buy stocks that go up because

the fed has it consistently below the 2% level.s a view that that 2% has not been a target, but a ceiling. and perhaps if the third stance is to get an average, that inflation could run hotter. romaine: this announcement comes on a day when we got that weekly job claims report. a lot of questions as to whether that did not necessarily take into account a broader employment picture it seemed today that they will be an adjusted view of the employment situation which will allow not only inflation to run hotter but potentially let the labor market run a little bit hotter. joe: we are joined by bloomberg's matt bosler. point in- is there a recent history that you can point to that if the fed had this framework as opposed to the old one, maybe policy would have gone in a different direction? matt: i think so. i think you can go back to 2015 when they started raising interest rates. they had not sustainably achieved the 2% inflation target yet. some of the work people have done on average inflation targeting over the past couple of years

plywood the fed's monetary ease -- why would the fed's monetary ease since the financial crisis failedntially lift inflation to target? the fed's new strategic framework supports higher stocks , and as you just said, a weaker dollar. what i find so interesting is we to exone from ex post ante. where is the evidence that has ever occurred? michael: there isn't, unless you want to use the 1960's as a particular example. mickey leavy goes on to point out that the fed doesn't understand completely why fed dynamics have changed, and what it is holding down inflation. robert kaplan puts all of the weight on technology. if that is the case, then it isn't going to change. they are not going to be able to get inflation higher. tom: what you just got is a clinic for michael mckee. i can't convey enough the importance of this speech. anna edwards, this will resound everywhere, including the bank of england. big questions about how other central banks follow on where the fed is leading here. that is a really interesting one. michael mckee, thank you very much. bloomberg's international economics a

not other mem benches the fed. most notably fed president john williams pounding the table about the deflationary crisis, although the fed prefers to call it a lack of inflation. late in the day news broke that jerome powell, is set to deliver a profoundly consequential speech at jackson hole on thursday this is the virtual version of it, with the aim to allow inflation to rise above the target for a long period of time. it is being compared to the dramatic efforts from paul volcker to arrest inflation in the early 1980s. this time it is set to spark inflation or better yet stave off deflation. it takes several dots to see how homeless woman with children will benefit from lower rates. but they have a better chance in an economy driven by investment and confidence in the stock market. certainly better than the alternative. i want to get to the perspective from two brilliant, two of the most thoughtful market pros come on the show from time to time. bny mellon chief investment strategist, alicia levine and divine ca

fed, it will the likely be hard for the fed to actually out of the markets today.arkets appear primed for some confirmation that the fed is going to be open to this inflation overshoot and this aggressive stance. if this is confirmed, we would expect to see the dollar come under more pressure, adding to these underlying fundamentals. there's a real risk that we could see the dollar catch a bid, should the fed disappoint and not provide details. that is something we saw post fomc meetings last week. we did not see hence of this imminent shift. it does set up the potential for dollar strength today. anna: good morning to you. it's interesting to see the asia-pacific stocks down, 1/10 of 1%. consider some of the latest geopolitical tension between the u.s. and china. maybe that's an achievement. they are testing missiles. the trump administration putting trade visa restrictions on some chinese officials. all of that could have led to something more of a selloff. i suppose we are all waiting for jackson hole. laura c.: that is the case. u.s. china tensions have been --

the fed and treasury must learn from p.p.p. and reform main street lending so it contributes to the employment of working americans. please don't bail out real estate investors while they push workers off the cliff. thank you for this opportunity. i welcome your questions. mr. hill: thank you, ms. mills. appreciate your testimony today. we'll now have a round of questioning. i recognize myself for five minutes. let's start with ms. anderson you were talking about your view of the banks taking up of the -- of these loans. and what modifications might be made for less than creditworthy borrowers. i understood that point. but as i said in my earlier questioning, 5,000 bangs jumped on the opportunity to help in the p.p.p. environment under the cares act. we have got very few banks that are engaging here. what is the bank policy institute doing to promote banks participating in the main street program? ms. anderson: thank you for your question. in terms of member banks, the vast majority of our members are participating in the progr

you have the support programs from the fed. we know the fed has been buying some investment-grade.can't get a lot of yield anywhere, and when you are up in credit quality, there's this tremendous demand for some sort of yield out there, and ig definitely satisfies that. tom: kathy, thank you so much. i think what is so important here are the street calls in august. deutsche bank has eight big figures on euro-dollar, $1.18. we are seeing a lot of activity in august. morning?ou see this -- the think everyone current presumption -- i think everyone is looking at ecb this morning. the current assumption that the will behat the pepp used in full to buy assets around europe. by all settling into kinds of assets recently. tom: we heard about the tips breakevens. they have come up, but i've got to be honest, i was surprised how many inflation expectations really haven't come back, have they. -- have they? anna: indeed. we are having some any conversations about inflation, but people who point to the way tips have moved or the way we seen upticks in inflation expectations recently, they are

got the fed on hold. yields 0.6% or so. the real yield is kind of a signal from the bond market and from gold moving in tandem that you could buy basically anything but nominal bonds, and you would be better off. in that sense, gold is a kind of get out of here trade from the perspective of the bond markets. you season rotating not just gold, but other secular things, cryptocurrencies, all kinds of assets that otherwise wouldn't make sense if the cost of carry wasn't really meaningful. if growth rates are able to normalize, you will see investors continue allocating two things that maybe they would not have done in the past. jonathan: great to catch up. our best to the team. coming up on the program, we will talk more about the fixed income market with rob waldner of invesco. just at the epicenter of some of the shifts we have seen cross asset worldwide in the last couple of days. asa: we are definitely seeing bleed up in the benchmark 10 year real yield. leading to questions, is the ,elloff in the treasury market does it h

we would argue that the fed cannot create inflation. they can create the conditions that lead to inflation but at the end of the day the velocity of money is determined by the economy and how people are spending their money. forill be very difficult inflation to suddenly materialize. seen supply push inflation. we are still waiting on that demand pull in inflation. do we need good inflation? what is the difference? george: excellent point. if you look at the two components of inflation, services -- inflation for services have been going up at roughly 3% for the better part of the last decade. when you need to get something done, it is costing you an increasing amount of money. however, when it comes time to buy a hard we see actual deflation. your point about is their supply-side shock working its way through the system on the backside of covid, there is some evidence that may be occurring, but it would have to be global in nature, sustainable over time , and very broad-based. to really create the backdrop of a material increase in infl

from the fed chairman.nded by investors on long maturity u.s. , compared to short-term notes increased the most in some two months. so certainly we saw a response in the bond market. janet henry, hsbc chief economist is still with us. let's talk about what we heard from jay powell, janet. allowing inflation to run higher, allowing an economy to run hotter, does not mean that inflation will run higher or the economy will be hotter. do we need to hear a bit more next month from the fed around how they actually stimulate as -- toward more growth and more inflation? janet: we need to keep listening to the fed. i mean, in terms of what we got yesterday, it really confirmed what we already knew as powell had flagged and all we would be doing is codifying what was already their reaction function, having undershot inflation for so long they were willing to overshoot moderately for a period over time. but i think what's quite clear is that there is a bit of divergence of opinion on the fomc as is usual on a central

>> the fed talks about inflation. consumers,urveys of they are almost always dramatically higher than measured inflation. the average person isn't carefully thinking about the full basket of consumption. they are thinking about which prices changed. if you look at the three or four prices that went up last month, you get a higher inflation rate. rather than talk about inflation the way they think about it, we get atfield experiments, what people are thinking about saying. now from thee policy side. what does it mean to shift to inflation averaging, if you don't give a formula or a timeline for calculating the average? this whole thing seems pretty vague so far. a lot of different views on the fed. >> is kind of vague right now. broadly what they are trying to do is say, we are going to tolerate higher inflation. we are not going to give you any particulars right now. but just realize, if we make a mistake, it is going to be on the upside. i don't want to be like japan, where people worry that the bank of japan would p

fed chair jerome powell gears up for a high stakes speech from jackson hole summit. with bullion up, big tech up, what is up with the market as we gear up for powell, guy? >> i like to hear you say bullion. i feel like i'm going to have soup or go back to doing what i used to do back in the day it's wonderful you can do an entire show saying that word. what's up? risk assets are continuing to go higher based on we talked about this a couple days ago, the fact they said they will be a historic speech for the fed in the way they view inflation, the way they measure inflation and that's why the market took off and i think that's why you saw it probably move today into that speech the things you didn't mention and forget it but they didn't rhyme with b or start with b the russell was down today and the vix closed north of 23 those are two very interesting things to take into consideration along with the three bs that you just mentioned, mel. >> so the three bs plus the extras tim, how do you read the tea leaves >> i think you're going to get some backlash. i think ultima

if you were right well you know the fed is out buffeting buffet right if it were taught fraud how to commit fraud to the central bank you put a lot of money in and buy stocks that go up because you're buying stocks that go up right so he made that game possible and so but the fed figured out wait a minute why are we letting warren take all this fraud money we should get some of those fraud money so now the fed is i've often buffett so something will for buffett to do you know he is entering the game of precious metals and precious metals is a nonstop sort of manipulated market j.p. morgan has been fined over the past 2 years for manipulating the prices gold and silver i think they're still under criminal indictment actually they're there there's a criminal investigation from the department of justice but the biggest oldest 1000000000 bank in the world is scotiabank and they've just been fined $127000000.00 for manipulating gold prices 3 spoofing this is on top of a $100000000.00 that they were already fine like one or 2 years ago and then they failed to disclose some information in t

not just the fed, but all the central banks in the?escue of the markets with massive liquidity. that leads to all kinds of weird trades. some of the level 3 increase is there. eventuallyhose will make the banks money, but it is hard to tell, and maybe some of it depends on whether the central bank support for the financial system is going to last forever, or, when it is not there, if it is withdrawn, what happens to these trades? greg: fascinating stuff. thank you for joining us. yalmanman owner and -- of bloomberg. we have some perspective on how jd powell and the fed feel about how things are unfolding. lon erickson joins us. this is bloomberg. ♪ greg: this is bloomberg markets. at the top of the hour, we are going to get the minutes from soncon see meeting -- meeting. always a great opportunity to pull back the curtain. lon erickson, let's start right there. we know the fed has concerns about how love this -- about how all of this will unfold. lawn: -- lon: yeah. i think the fed is terrified by the idea of what it does not know or c

is that all the fed? aswath: part of it is the fed.re drinking water competition that has been handicapped by the crisis. you look at marriott and hilton. these companies will come out of the crisis more damaged than airbnb ever will. in a strange way these cap are a-like companies are being rewarded because their competition is being badly punished by the crisis. alix: what do you make of the actual ipo part? what did you make that they are going to go the traditional route? did that mean anything? aswath: not much. i think the bankers must have accepted a lower fee. at some point in time, the banks are probably saying we cannot let the biggest ipo of the year go back -- go by as a direct listing. i would not be surprised if the commission and banks are getting on this idea way below what they would get in a standard ipo. that is really interesting. another unicorn, let's talk talon tier technologies. aswath: how you take a company that is so secret, you don't know what it is doing? that will be the challenge. yet to take them at face

we have the fed rooting for a higher cost of living. we have double digit unemployment right now in this country. the last thing we need is higher inflation. imagine if it does actually happen i find it hard to believe that longer term interest rates, because the short end will be penned by the fed, that long-term interest rates will just remain sitting where they are. the world's bond markets will not just sit by idly and the successful banks will mo move inflation higher. >> kathy, we've come a little less than 12 basis points the last couple of weeks listen, what peter is laying out does not sound great, but neither does deflation if they can't get kind of higher inflation, we're stuck in this deflationary situation, you could have negative bond yields. i don't think anybody wants that you face a cost of living shock that way as well depending how you make your living, especially if you're on a fixed income or trying to draw income from investment security. which to you is the lesser of two evils? >> well, i think deflation is worse

the fed remains more accommodative to companies.ee this divergence between the real economy and the financial markets. this is something to be looking at as we go towards friday's job number. the report friday will be important. powell.k to the fed not actively concerned. deals.e of let's check again. sweave really going after de. you are looking at around $6 million as an enterprise value. $2.6 billion. they tried to do this deal. risk on, equities are up, china data stronger. looking at the services data since 2018, you are looking at the strongest manufacturing data out of japan since 1958. the nikkei up 1.25%. our guest host this morning from danske says you want to be longer the yuan against the euro. up 0.3% on commodities. steepeners will come. the fed will give more qe. important, soe says the guest host. we very disingenuously cut you off when the commercial break came along. to you was about the u.s. election. how do you want to play that? we are in a new dollar trend, so everyone tells me. in the moment of prevarication o

from fed chair jay powell.ourse, have live coverage of his speech later this morning ahead of that, we want to get to steve liesman with a bit of a preview and a bit of speculation of what wemay be hearing this morning, steve >> and a special guest markets are awaiting that speech from fed chair jerome powell at 9:00 p.a.m. they're also listening to the european bank economist and governor of the bank philip lane. governor, thank yous for joining us >> thank you >> let's get into it here, the eurozone fell a little bit less than the u.s. in the first quarter. fell a little more in the second quarter. i'm talking about gdp. tell us where you think the eurozone is right now when it comes to recovery and where it's going. >> so, i think what we've seen over the summer, it's more or less in line with our baseline projections. so, in our baseline, like everywhere, quarter 2 is going to be the worst quarter. which, by the way, within quarter 2, at the worst month would have been april. so, we've had a great big falli

this fed even more vocal than the fed when obama was in office.re pretty upset with fiscal policy that they thought mitigated the efforts they were making. would the fed do more in the absence of congress that just won't pull the trigger? >> i think the fed is having discussions behind closed doors how they can expand their ability to do more in the absence of fiscal stimulus. how and what shape that would take i think still remains undetermined but as you say, jay powell is, he is different than his predecessors and he is determined that the economy not falter even though a lot of his tools have really been limited to benefiting wall street as opposed to getting down to where actually small business owners need the money. so i think he is investigating ways to be creative. charles: right. >> and that just, you hear the money printing going on in the background. charles: i thought that is what i heard. danielle, thank you very much. always appreciate your expertise, particularly at a moment like this. we'll see you again real soon. >>> meanwhile,