and all of that goes into our fomc deliberations. in particular, it informs our understanding of what maximum employment really means. so we focus on, at every fomc meeting, in every briefing, in pretty much all my public remarks in my colleagues public remarks, we will call out for example, unemployment rates and labor force results not just because it's the right thing to do, but it's something we are very focused on. these disparities are a long-standing feature of the american economy and they really do hold us back. as rafael bostic pointed out so weigh on the whole economy. so all of that goes into our thinking. not in a mechanical way, but in our understanding of what maximum employment is and you saw during 2019, when the unemployment rate fell to 3.5%, well below most estimates of a sustainable rate of unemployment, you didn't see us raising rates or expressing concerns. you actually saw us cutting rates during 2019, not because of that but we were hesitant to cut rates because of the low level of unemployment. susan: so, ju

the median estimate from fomc 5.5%cipants declined from to 4.1%. the muted responsiveness of inflation to labor market also contributed to low inflation. the return inflation expectations which we have long seen as an important driver of actual inflation and global inflationary pressures may have been holding down inflation more than was generally anticipated. struggled toe also achieve their inflation goals in recent decades. the persistent undershooting inflation is cause for concern. counterintuitive. low and stable inflation is essential for a well-functioning economy and we are certainly higher prices for essential items such as food, gasoline and shelter add to the burdens faced by many families, especially those struggling with incomes. inflation that is persistently too low can pose a serious risk to the economy. inflation that runs below its desired level can lead to an unwelcome fall in inflation expectations which can pull actual inflation even lower, resulting in adverse cycle of ever lower inflation and inflation expectations. this dyn

risk off morning today following the fomc. what is your take?ere you disappointed about the uncertainty they gave in these minutes? joseph: high. good morning. nice to hear you. you are right. the big talking points for markets this morning is around the fed. i think the tone that they struck was one that reflects the significant amount of macro uncertainty that remains in the system. markets are probably a little renewedppointed by that reflection. to be honest, it's a realistic assessment of where we are. there are three big unknowns, as you mentioned. we've got the control of the virus and the trends around the virus, particularly into the back-to-school phase. uncertainty around the u.s. election coming up in the fourth quarter. and the significant uncertainty around the growth trajectory. we face that globally, particularly in the u.s., especially in the environment of what will happen with policy support and the stimulus plan. there's a lot of uncertainty. a lot of important questions this regime of lower forever interest rates is going to

dovish innovations coming through the fomc.top of everything else, you have a situation where the fiscal stimulus extension talks are not going well. economist think of failure to tos a deal -- $50 billion $60 billion. that sets the u.s. aside from many other countries that are chugging along in a relatively benign fashion at this point. good morning. that adds to the response i got to mike mckee about what impact not following up on the care act would have on the u.s. economy. looking at what drives the dollar, it is the things you mentioned. it is also risk appetite and if there is more appetite for things not u.s., nominated -- not u.s. denominated, is that we are seeing, generally trading around that theme? it,ab: that is an aspect of but the dollar being a global funding currency, then as long as global conditions are benign it tends to gravitate lower as a rule. things accelerate when you have more active divergence as well. i would say the spat around the cares act creates the perception that is possible. it may still be

. >> lastly, we have the fomc meeting minutes due out. do you think we'll hear anything that changes the market narrative? >> it will be interesting to see. i imagine the fed was willing to cut interest rates unemployment now, i would think they would be looking to keep rates very low for a long period of time or at least give the market that impression and try and assuage any fears for the tightening jerome powell doesn't want to make the same mistake he made in september or q 4, 2018 talking about rate rises when the market was vulnerable. i don't think he'll upset the apple cart that the stimulus is there or more will come if needs be >> a lot going on state side this week. democrats have formally nominated joe biden for the presidential delegate. supporters rallied and say he will be a steady hand to lead the country out of the pandemic. biden appeared from a school in his home state of dell to briefly acknowledge the nomination ahead of his remarks later this week. >> thank you from the bottom of my heart thank you all. it means the

we will get so fomc -- some fomc minutes tomorrow where they are likely to talk about inflation averagedng, which is relatively new. if you look at the manufacturing side globally, we've seen better-than-expected macro data somee will also see monetary fiscal stimulus. that has moved into asset prices. the third point is around oil. oil has had a huge comeback. not expecting to see a massive spike in the price of oil, but certainly moving back toward that $60 mark as a base in the next year or so. that will have an impact on inflation as well. i amnda: quickly, wondering, do you view the november elections as a potential risk? do you see volatility leading up to november? thomas: certainly, for sure. it's something we've been talking about for about ask months now, and i think now that we are a couple of months away, three months away, you are going to see investors focus more on that. same, it comes back to the conversation around tech and nasdaq type stocks, where we've been seeing joe biden talking about raising corporate taxes in the u.s. in general, but specifically closing loophole

we had been bearish on the dollar beginning in late march through the july fomc meeting, and then whengot to the july fomc meeting and we heard chair powell discuss the outlook, he did not touch on inflation to the extent i was hoping he would, especially seeing the fit heading into this new -- the fed heading into this new monetary policy strategy framework review. we decided to invest our clients peel back from a long portion of those dollar short positions we had been recommending. elements tohere are keep downward pressure on the u.s. dollar more medium-term. in the near-term, we need more details from the fed on the level of their commitment to achieving 2% inflation and we in termsee commitment of how they are planning to achieve the 2% inflation. how long is the fed willing to keep interest rates at the effective lower bound in order to encourage inflation to average 2%. that is important. tom: a friday question. i go back to william gross of financialthe phrase regression, the harm in the gilt market for retirees. is this financial repression for longer? marketharm in the yield

that is something we saw post fomc meetings last week. we did not see hence of this imminent shift.t 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 -- trump has made it clear that a tougher stance on china is a key element of his election campaign. despite the progress that he wants on those -- the phase one trade deal. it's all about powell. we have this hurricane as well. those two are quite negative catalyst for stocks heading into the session today. matt: we could see as much as $25 billion in damages from this hurricane. that's if it holds that a category four. ask theo quickly question of the day. you are

fomc -- powell and the they unanimously adopted the statement before he spoke -- what jay powell and the fomc are saying is they are catching up with reality. -- and jay powell was framing this as we have to be realistic and pragmatic. this is how the economy has changed in our process must reflect the way the economy has changed. david: you've been a central banker on the monetary policy committee and the bank of england. as we look at changing fund mental policy, we have talked repeatedly about the fact we cannot figure why unemployment could go solo. did we figure that out? did we figure out the mechanism, and if we did not do we want to change the policy without knowing how it works? adam: is a really good question. years ago, trying to say you cannot not follow patterns in the data, you have to know why. i think we know part of why but not all of it. one part is economists and central bankers have blinders on. there was an assumption that once people dropped out of the workforce were out of work for a long time or went on disability, they cannot easily come back in. if women mov

let's get started with the fomc minutes. people were not happy with the economy,ture of the and this time no immediate action from the fed. in terms of see market reaction? will they still find a floor given a potential stimulus package soon? the market does not look to the fed for proprietary economic insight, so i don't think the selloff was tied to this. there was a clear reassurance from the fed they would do what it takes to support inflation among the historical, short-term target. the market was at record levels. it was an excuse for a selloff. there wasn't anything proprietary in the outlook, which remains uncertain. some good retail strengthen good strength from the technology companies, but there is still uncertainty around the path of the coronavirus with the flu season, and what that could mean. surpassed also, apple that $2 trillion mark. theave seen a huge rally on tech sector, right? does still a record, or the breadth and volume and health matter going forward when this seems to be so narrow? jim: it is reass

data on first outcomes among different groups and that kind of thing and all of that goes into our fomc deliberations in particular informs our understanding of what maximum employment really means that we focus on at every foc meeting in every briefing it's pretty much my colleagues public remarks and the monetary reports and we will call for example on labor force results not just because it's the right thing to do but i'm thinking about maximum employment so this is something we are focused on. these disparities are a long-standing feature of the american economy and they really do hold us back as was pointed out so well recently. they weigh on the whole economy and so all of that goes into our thinking not in a mechanical way but our understanding of what maximum employment is in that's why you saw during 2019 when the unemployment rate fell to 3.5% well below most estimates of the sustainable rate of unemployment. he didn't see is raising rates are expressing concerns her to celebrate and use saws cutting rates during 2019 not because of that but nonetheless we mark hesitant to cov

expect we will get more information about this late next atk, and then a full review the september fomc. an importantis is evolution in monetary policy. anna: looking ahead to that symposium and the fact it will be taking on stock of the 10 years to come, do you think that allowing inflation to run hot could be a theme of the next 10 years if we work our way towards that important symposium? bob: the important mechanical implication of average inflation targeting versus a framework does not use average inflation targeting is that inflation shortfalls in the future are no longer considered by guns, which is the weight -- considered bygones, which is the way policy has been managed over the decades. any shortfall relative to the 2% core pce will absolutely need to be made up. od of will, for a peri time, assuming the leadership they willange, embrace average inflation targeting, which will allow inflation to run above the 2% , for example,hat over a two-year horizon, inflation is averaging 2%. tom: we've been doing the last couple of days the mathematics of the nominal yield minus the inf

tom: you and i know the shadow fomc is out there.key leavy, who part of that with baron burbank. plywood the fed's monetary ease -- why would the fed's monetary ease since the financial crisis failed to substantially 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 ce

at 2:00 p.m., the fomc minutes from the july 29 meeting. that seems like a long time ago, doesn't it? will we get more details on how they see their strategy around inflation developing? at 9:00 p.m., we get the dnc night three. ,t was a pretty emotional night telling the life story of joe biden by jill biden, and his ability to cope in times of stress. we'll see how that goes down with some of the heavy hitters speaking today. tom: i don't know if there is a united kingdom equivalency, but what an experiment this democratic convention structure is. the scaffolding going up at the white house for the president's speech, and the focus on the president has the incumbent. but it is fascinating after the pandemic what our politics goes back to. in the united kingdom, is there that same sense of a political process that we really don't know what it is going to be like after the pandemic? because weps, but have just come out of an election, you remember last year, there is a sense of chaos, a realtainly around tragic amount of chaos in some circu

we will be looking toward the september fomc meeting, press conference that follows to see if powelltes on that. for now, i think they rely on existing tools, quantitative easing, these emergency lending facilities. things that they could implement, has been examined to some degree, some form of control. as interest rates backed up, if they consistently moved higher, maybe the fed would think about capping interest rates. the other thing is they could adopt more explicit forward guidance. that one seems to be more likely. maybe tie the interest rate lift af, whenever that happens, to threshold on inflation or the unemployment rate. although what they did today sort of removes the need to do that, to be honest. greg: when we start talking about perhaps dabbling in yield curve control, more explicit forward guidance, it makes me think, is there a chance they could lose control of the things that investors are betting the fed can control for them in the long term? there is always some risk, question about how much implicit power the fed has on the yield curve. a lot of other factors tha

if you look at the june fomc, 14 of the 16 projectors of the dots had zero interest rates through the end of 2022. , it wasn't just a not-seven -- or 9-7. their forecasts are much more bloombergve than what had. they are becoming a little less data dependent, and i think there's a separate conversation as to whether that is healthy for the long-term economy, but to 3650 andgetting beyond, i think it is very clear that that type of overwhelming support and cohesion within the fed on these policies gives you high certainty that interest rates will be very low, with one big caveat. if inflation starts really climbing to a much higher level and the term premium on 10 year treasuries is young, perhaps by -- is yanked up, perhaps by bund yields, that could be the big wildcard. jonathan: lisa doesn't care about equities. yesterday when she got really bored, she pinged me and said watch out for alphabet. they are issuing debt. tom keene, i have to say, if you , it is that debt priced unbelievable. lisa: crazy. nothing.y costs there no other way to put it. you have to believe there will be str

given what is happening in d.c., how much pressure is the fomc under? michael: there is pressure, but there isn't much they can do about it. i think you will hear more and more, especially around the jackson hole conference coming up, that they can't do very much at this point. the impetus has to come from washington. the interesting thing will be the september meeting, whether they change the forward guidance. a lot of wall street has been betting on that. we heard from rosengren, and we heard from bailey daily -- from mary daly of san francisco. they may not do a whole lot at the september meeting. billion ofd $112 longer-term u.s. treasuries sold this week, a record. a little bit of indigestion showing. what is the threshold for the federal reserve two entries urges is -- increase purchases of longer dated bonds? michael: they would like to wait on that until the economy could use some additional stimulus, putting more into the economy through the financial channel. we saw with qe that that has an announcement effect, but doesn't have a really long t

in 2012 it was 5.5%. 4.1% was revised down to by the fomc. the economy has for the past two years run under 4% and no inflation whatsoever. he says that the people on the edges they've heard over and over, the minority community and those out of the labor force were brought in by this economy. and over the past two years that has changed the view, the mindset of the federal reserve. also he says he has every reason to believe that before the pandemic hit that the economic expansion would have continued the way it was going on that rocket ship level there. powell says the fed will be prepared to still use the full range of tools going forward to support the economy. stu? stuart: edward lawrence, thank you very much, indeed. i want to bring in art laffer, art, i know you were listening to what edward was saying. my interpretation is this, it's going to print a lot of money. is that right? >> i wouldn't say that, stuart. but i would say what they're doing is trying to be very accommodating to the markets, and i think they're also saying that the

the selloffs that followed the fomc minutes looks set to fill in europe.he cash trade is an hour away. here are your top headlines from the bloomberg terminal. the fed flags the risks. global stocks slide. u.s. central bank minutes say the virus will weigh heavily on economic activity. also betes will released later on today. the u.s. suspends its extradition treaty with hong kong. beijing and washington are also set to play in resumption of trade talks after last week's flop. the eu rejects the results of the belarusian election. the block falls short of calling for a fresh bowl even as eight individual members back that kind of mood. -- move. let's take a look at futures. we are seeing red across the board in terms of european futures. more than 1% drops on the euro stock. ftse very widely traded. dax futures in frankfurt. acrossseeing red arrows u.s. futures as well. still looking at drops their. 0.5% on s&p, dow jones, and nasdaq. anna? anna: we see the european equity market having to catch up a little bit. let's get to breaking news in london. too la

there obviously waiting for september fomc announcement. matt: i have got to jump in here.re starting to sound a little bit like chevy chase in " fletch." we will work on this phone line for joubeen hurren. he is going to stay with us. did i say "fletch?" i meant "spies like us." seen provisions for loans, putting aside over 1.3 billion euros to cover the expected defaults. income at the bank slumped 79%. it is a similar story across much of the industry, with banks being hit by the unprecedented impact of the coronavirus. europe's largest engineering company has dealt with the coronavirus better-than-expected. earnings were bolstered by cost savings and a recovery in china. a big jump in profit at its software business also offset declines in other areas. first is setting up its -- in europe with an investment island, promising to create hundreds of jobs and improve the safeguarding of u.s. data. the app find itself at the center of tensions between washington and beijing. that is your bloomberg business flash. annmarie, matt? annmarie: coming up, speed over safety. dr. fa

but i think what's quite clear is that there is a bit of divergence of opinion on the fomc as is usualk. and they've been quite clear not to give any state specific, calendar specific. they also know that there are huge constraints about stimulating the economy. when you're already at -- that a lot of support will need to come from the fiscal side. so yes, we may get a little bit more in september. but to be honest, i think we've had most of it for now already. and only over time might they become a little bit more confident about giving us something specific date wise or magnitude wise. but actually, a lot of what we got yesterday that's got less attention is what they said about the labor market. about their reaction to unemployment which is clearly going to be less important in the coming years if it doesn't show up in inflation. matt: you know, i was really excited about this. this change in -- in structure. especially after i saw joe wiesenthal from bloomberg tv in the u.s. made an analogy like if the department of transportation set a speed limit that fluctuates depending on how

i would say, though, there is quite a lot of continuity on the fomc it's a large number of people. 17ly 19 at full strength if you look at all the participants, and it's not just the chair that imposes policy and imposes the goals on everybody else. it's really very much a discussion that culminates in changes like this one. and this is definitely historic change but it's been a long time and coming, and i think on the day what we're seeing today is not particularly surprising. there's a nuance for sure. but the idea that they've been going toward average inflation targeting, i mean, that's been clear for a year or more >> right finally, you've been pretty i would say relative to your peers constructive on employment levels at the end of the year. certainly on a q-3 gdp rebound are all of those theses intact and did the speech do anything to move it at the margin or data today? >> i think they're intact. the speed of the rebound in both the third quarter we're at 26 .5% currently for gdp growth there and also for growth in 2021 that's really been driven by the idea that certainly cert

he is also not a voting member of the fomc this year. back to you, stu.nk you very much indeed lawrence. edward i should say. that is negative i would thought for the market. there is no negative impact at this point. he is a non-voting member of course. that news just released literally seconds ago is just hitting the market but it has not yet had a negative impact there. >>> it is official, big 10 and pac 12 have canceled their 2020 college football seasons. huge financial blow to the colleges. they will lose billions on this. we have the full story. >>> the dnc unveiling its virtual convention schedule. i really don't know how they will pull this off. how do you even cover on television a virtual event like this? totally different from a normal convention. martha maccallum will be with us shortly. as for joe biden's choice of kamala harris. here is what president trump had to say about it. roll tape. president trump: she is very big raising taxes. she is against fracking. she wants to take your health care plans away from 180 million americans. stuart: