that's changed a lot since argentina instituted a central bank and the politicians that was in 1935 so a little bit after the u.s. when the u.s. institute of the fed obviously in 1013. argentina had that golden era prior to that establishment of the central bank then of course like in most places you know the central bank is the magic money machine for the politicians and that's really how argentina started its long descent. downhills when the politicians discovered they had this magic money machine and that's led to in a nutshell you know in the past 100 years for currency collapses and now we're look to be on the cusp of the 5th and they have political update hable of 176 of course the same as a seminal moment and chaos in terms of finances because as a fair statement yes ok. now we 1st met in beirut back in 2011 you spend part of your hear hear what is there is the latest currency crisis has begun so you just described it gave us a bit of a history there you're an international man yes there was k.c. yes i know he has a place in argentina as well so how do you position argentina in the international man view of things you've spent some time her

you know, one of the great passions that paul volcker had was defense of the fed as an institution ande fed's independence he bristled back in the '80s when privately they expressed some sentiment of -- in the white house of how they wanted him to behave. i could only imagine if the president of the united states was publicly getting up and declaring a fed chair to be a dope, to be an enemy of the state and all of this kind of stuff. i think, boy, they would have -- that would have been a battle royale even late in his life, it really upset chairman volcker, that the fed had lost some step of independence. >> in an era where it is very easy and very convenient to criticize public officials, he put public service first right? >> yeah, he did. >> that was his life. >> he started -- that was his life, and he started this volcker alliance, which is about trying to encourage people to do public service and to improve the efficiency of public servants who knows? is it that society has changed is that we don't make people like that anymore? but he was a person who was dedicated to the public

of effective. the president has actually gotten what he has wanted from the fed with the exception of negative interest rates. it has, in some sense, worked. from the institutionalve of fed independence, i would say it's been really bad. >> narayana, fed chair powell was focused on inflation and his concerns for the future. what are your thoughts about where we are and where we're headed for these key metrics >> yeah, courtney, that's a concern i have had for five years and continue to have inflation remains well below -- not well below but it has been below target since -- about 11 years, since the dark days of 2008 what puzzles me about the fed is you'll hear words about we're committed to our target, we're committed to symmetry around our target if you're truly xhted to it and inflation continues to run below target in your forecast, if you're not worried about inflation, and i think chair powell was clear in the press conference, he would welcome above 2% inflation if that's the case, why not ease policy still further i have been puzzled five years i suspect i'll remain puzzled in the coming year. >> narayana, a question was posed to the fed chair why do you

overnight lending rates revealed that the plumbing of the financial markets is broken banks and other financial institutions simply didn't have enough cash the fed acting as a plumber started pumping in lots of cash to ease the crunch they claim with unintended consequence no that's the policy you know that it's as one's been saying for years now the policy is to is financial engineering is financial here geisha and they let the water flow of money liquidity go only to their friends on wall street and labor gets nothing and so is it a one trick pony well it's a system that's in collapse in other words if you if you have a water main break in your neighborhood and nobody stops it the hole they were gets flooded into all the neighborhood is. ministre so we've got a leak at the fed we've got a a leak of the capital's leaking out there's a flood of capital without any constraint whatsoever there's no down there's no barrier there are no laws there are no rules there's just flooding the pockets of a few people and it will kill the economy that'll get it's killing the economy it's the economy is dead it's dying you know this is i believe a trick they'

the fed raises rates. stocks are only one of the assets available to individual institutions there's gold, real estates andcourse the bonds. gold is a safe haven and every person should hold gold. prefferably bullion. a hedge against a catastrophe that hasn't occurred actual real estate had be a good he hedge but most people don't have the money to invest in the real estate they can buy. they are not reliable as a proxy for real estate. finally bonds is an investment alternative and it's the source of the problem as the fed raises rates. as the fed tightens bonds become more competitive with stocks you'll notice that as the fed jacks up rates, high yielding dividend stocks are going to be among the worst performers because the yields look a lot less attractive versus what they get for bonds and they're not more risky than treasury please be careful of these stocks as safe havens when the sell off is caused by the fed. they're very different for accidental high yielders that can spread back when the stock is tightening. the fed isn't perfect. i keep talking about the 17 rate hikes because the fed isn't perf

the institutional, commercial side. there was a true inventory recession in the first art of the year. fedr side, the the confidence they are ready to put that on the table. carol: the fed seems to be indicating they are staying pat until things change through 2020. do they need to keep cutting to keep growth going? >> i don't think they do because of the consumer. last time we talked, we were talking in monthly year-over-year growth rate for consumers at that time being 5.8%. closer to six now. holiday spending is up double digits from last year. you are seeing it now through cyber monday, great discussions between people about how many days until christmas. even now you are seeing the growth rate at 6% year-over-year , almost 10%rds overall. a lot of spending going on. we feel very good about the consumer in the u.s.. that is two thirds of the u.s. , almost 10% overall. a lot of spending going on. economy, as big as the chinese economy. in europe, consumers are spending also. that is a big part of the world economy that is solidly moving forward. >> you have a vantage point into the cons

of the reason for the fed. he's talked about it all the time. >> he has talked about it. he has talked about it he has never instituted a tariff on a nation specifically because of currency devaluation. that's a fact. he has not done that today he did that. that's what feels different to me from where we left off last week when i was sitting here on this desk telling you you need to go all in on equity, so all i'm saying is you got a warning shot today that potentially in the next ten days you could be faced with something that's representing a different position towards your attitude -- >> down 18 points -- >> i think's he right and i want to buttress this point for a second the market is saying, wait, the president has not learned that tariffs are a blunt force instrument that should not be wielded as frequently as he's wielding them. >> the market is not saying anything the s&p is down 20 points. a record high market. >> going into what we all agree should be both by the end in the markets and seasonally a great month. >> it's a bad start to the month. >> you're getting too worked up over one day, the first day of

we do, in our enforcement practices at the fed with respect to financial institutions and the abuse of the financial system, we work closely with the department of justice frequently and the department of justice actions arrive from referrals from us, with reinspect exhibit to the financial system. so, that's something that we are, you know, the issue is something that we're heavily engaged with, but i'd be happy to get to more-- >> i saw that, and just for a purpose of the chairman's comments with regard to digital currency, this is something i'm very, very interested with as well. can you talk a little about what you are doing in the space right now or anticipate looking at when it comes to digital currency, if anything? >> so that's at very early stages. i would say that until, kind of the recent international focus on stable coins, there was a general sense among most of the central banks of the advanced national economies, with isolated exceptions except for sweden, that digital currencies would not -- you know, were not really necessary and they weren't addressing a serious need

we do practices at the fed with financial institutions and the abuse and we work closely with the department ofjustice frequently and they arise from or referrals with respect to the financial system. that is something -- the issue is something more heavily engaged with and i'd be happy to talk with you more. >> i would appreciate that. just for purposes on the chairman conversation, this is something i'm interested in, can you talk about what you're doing in the space and what you anticipate when it comes to digital currency if anything. >> that the very early stages, until the recent international focus there was a general sense among most of the central banks of the economy in sweden the digital currency were not necessary and were addressing a serious need and it would be something that might be more rapidly adopted and emerging markets for a variety of reasons and maybe the same way they jumped overland on cell phones. but that we would sense the focus unstable coins have given up a process to the issues and there's a lot of issues and some technological and some having to do monetary poli

of the most respected macro economics advisers to the fed. grant thornton chief economist dianne swonk with us live along with milken institute chief economiste. dianne, i will speak with you first. give me your initial thoughts on the breaking news of the trade deal. >> well, we still don't know. the good news is there seems to be some kind of mini deal out there, likely over two years. the chinese have been pretty reluctant to commit to exactly what they will be buying in agricultural exports, but i think it is good news if we roll back some tariffs from september 1st and alleviate the fear factor associated with the next tranche of tariffs which were scheduled for december 15th, on sunday. so that would be good news for the u.s. consumer, allowing the u.s. consumer to play the outlet that it has played even as the manufacturing sector has struggled with what will continue to be tariffs in 2020. liz: yeah. i mean, the sunday tariffs are not going to happen. they are kaput. the president said we are not going to do that, we won't slap them on china. but bill, give me your thoughts on this, and that's got to be a positive, is it not? >> let

the institutional side and commercial side in terms of there is a true inventory recession the first part of the year. that classic working through the trade issues. on the consumer side, strength. it gave the fede to put the policy on the table, and it appears to be enough now. david: they indicated they will stand pat unless things change through 2020. do they need to keep cutting to keep the growth going? brian: i don't think they do because of the consumer. we look at the consumer. we talkedwe talked, about the year over year growth rate for that time being 520%. it still -- 5.8%. it still is. it is close to 6% now. you are seeing it through cyber monday. you will have discussions about how many days between thanksgiving and christmas. even halfway through, you are seeing the growth trade at 6% year-over-year. credit card, almost 10% overall. good about the consumer in the u.s. that is two thirds of the u.s. economy. it is as big as china's economy. those are big anchors. in europe, consumers are spending also. a big part of the world's economy is moving forward. david: you have a vantage point that no one else has, very few have, that's for sure. when you look at the lines for the consumer

of the institution. under christine lagarde, the ecb is about to launch its first strategy review since 2003, yackling questions such as whi -- the year-end federe under subscribed. it signals that dealers have ample funding for the end of the year. alan higgins from coutts and co. is still with us. the year ended repo battle but the war to control rates drags on. how much of a risk is the repo issue going to be in 2020? alan: i really see the repo is quite isolated. you could even say that coutts is part of the problem. we are long two-year notes leveraged. how do we finance that in the repo market on an underlying basis? all you are basically saying is that certain banks have been very risk-averse of the repo market. some of the major nationals at j.p. morgan because of regulation. if there is a warning sign like the 10 spread whitening, other signs of distress, then yes, there something going on, but this is very technical. i will steal from a matt miller from berlin. he said you can imagine a sea of treasuries, ultra safe treasuries but a shortage of action in cash. just because there is a sea of treasuries, is their problem? no, there is

institutional side, the commercial side, in terms of there was a true inventory recession the first part of the year, the classic working through the trade issues, but on the consumer side, i think the fede the confidence that they were ready to put that insurance policy on the table. david: the fed seems to be indicating they will probably stay pat unless things change through 2020. do they need to keep cutting to keep growth going? brian: i don't think so. we were talking about the year-over-year growth rate. the holiday spending is up double digits from last year, see you are seeing it now through cyber monday, and you will have great discussions uput how many days are christmas. and . there's a lot of spending going on. . we feel very good about the consumer in the u.s., and that is 2/3 of the u.s. economy. those are big anchors, and in europe, the consumers are spending also. it big part of the economy is solidly moving forward. david: you have a vantage point that very few have. when you look below the top line numbers in the consumer, do you see any over performance or underperformance, either geographically or socioeconomically? brian: i think you are seeing that wages are growi

institutional client short the 350s in march. you could go nearer dated i was looking at 345s in fed. >> since then there is major news out of boeingceo monday the stock higher from a week ago. mike obviously is not with us today. but he did generouslysend us a post card from california. quote, i'm cruising the slopes of squaw valley. but the boeing position isn't going downhill despite the departure of the ceo headwinds persist so i'm happy to continue staying put and collecting proposal yum for now. happy new year so christian what do you think of the trade as he skis in thoe. >> sounds like great snow out there which is nice i like the trade. i think bogey is in the headlines for a while. i think any time you see a little bit much bounce i think it's great to kind of re-establish that trade. i just think that they're taking a lot of time to work the situation out. and if you're long the stock already it's a great way to capture some income on the trade. >> headwinds and turbulence is what you see with bogey. selling cover calls makes sense. there is a line in the send, 320 the range it holds for some time if it gets below 320, i

the head of barings investment institute and is with us. this was the shocker. came in hard, it came in heavy, and it disappointed. does it unseat you in any way or is the fedessively and play? but is the consequence of the data readout from yesterday? christopher: it clearly puts the fed in thinking mode, but the fed is always watching the data as it unfolds. i think the markets have clearly been caught on the back foot given the rally in the last couple of weeks, but i think that is the tension we will have watching what0, is going on in the manufacturing sector, particularly capital investments, and whether or not there is enough confidence to see an expansion of the manufacturing sector to keep the jobs picture and the consumer picture as rosy as it has been this past year. nejra: we do see this tension playing out in a couple of calls we have talked about overnight. socgen, seeing the 10 year treasury yields dropping to 1.2% by the end of next year as the u.s. enters a recession. there will being a jump next year because the fed has finished cutting interest rates and the u.s. economy is in better shape. where do you sit between those two views? is it

trading and monetary policy and the fed actually ejecting liquidity and we have seen a lot of institutionalestors being short or behind their benchmark. a repeat of what happened 12 months ago would be very surprising because a lot of things have changed. matt: thanks very much for your time this morning. christian data occur, head of research at julius baer out of zurich this morning paired up next, more on our top story -- this morning. up next, more on our top story. fiat chrysler and peugeot are going to combine their businesses to make the fourth biggest automaker in terms of global sales. we are going to have all the latest details on this acquisition. and remember, bloomberg radio is live on your mobile device or dab digital radio the london area. this is bloomberg. ♪ ♪ matt: welcome back to the european open. 30 minutes from the start of cash equity trading across the continent and in the u.k. i'm matt miller, in berlin, alongside anna edwards in london. anna: let's talk about what's coming up today. the ecb's christine lagarde will speak in honor of been michael vick at 8:30 a.m. l

. >> with the fed, the fed changed the game heading into this year, it stayed that way and that enabled stocks to do what they have done. let's bring in steve, head of institutionaly strategy, barry banister it has a great year. where do we go from here >> i hate to be debbiedowner, but if you think about it, the recessions tend to be high impact and low probability events there have been seven recession related bear markets declines in the last 50 years. we think that is about a 20% chance of a recession in the next 12 months in 2020 and we have to haircut the fair value by 7% probability times outcome and that's about -- that's why our target price on the s&p, which is 3250 or so, is below the 3500 value that you could get to at a 20 multiple of zero real rates on about 175 consensus earnings, which above our estimates as well. >> so in your mind, the s&p is going to do nothing next year, even with a prediction of only a 20% chance of recession. how does that -- >> we would -- we would like to see the recession probability rece recede the market is underestimating the risk on the oil side towards midyear. the saudis will do anything it takes to get aramco off t

fed cows produce rich, creamy milk for a truly delicious taste. kerrygold. the taste that takes you there. >>> dozens of religious institution in the king valley is going to be on worship. it's the joint effort between 30 churches and temples to donate food and support. some will offer a place for the homeless to stay. in stock in this part of the program, board member john gracie says they are campus will host a job-training center to help any adults staying there. >> teaching people whose falling on bad luck, because their trade is no longer in demand. showing them a new weight to use developing skills. >> there hoping to start sheltered the for those who are in need. sacramento county started the same program roughly 15 years ago. one miami businesses giving back to those who are in need over the holiday season by making the community look a little bit sharper. the owner of razzle-dazzle barbershop offers free haircuts to the homeless in south larry the am even ashamed. ever since the start of the program, they give 70 haircuts for free. the cause is important, because she spent time at the woman's shelter and now wants t

institutions. we had active discussions with the fed on that issue. that does impact the libor transition but the libor transition is a much broader problem. as recent as yesterday, a group of the banks and regulators on this. >> what did you mean by they will remain vulnerable? >> if banks and trustees don't prepare for the transition, trillions of dollars in 2021. >> to do what? >> from technology so that they have the ability, prepared the legal analysis, prepare transition, people literally have hundreds of thousands of transactions. part of this may be coming back to congress and asking you to pass legislation. there may be serious legal issues we are exploring. >> let me turn and let's go overseas for a moment. i'm very concerned about brexit and the particular impact brexit will have, and financial markets. and after delays and delays and failure of them, how are you concerned about this concern, on the cross-border transaction with the transnational market participants. >> i have been discussing this issue for the past three years with my counterparts in the bank of england and regulators and finance minister, it is a significant risk to the uk, it could have carry

institutions. we have had active discussions with the fed. that does affect the libor transition, but the libor transition is a broader problem. as recent as yesterday we convened a group of banks and regulators on this. >> what did you mean by it will remain vulnerable? sec. mnuchin: if banks and trustees and security holders do not prepare for the transition, there are trillions of dollars. people could wake up in 2021 -- rep. scott: by prepare, you mean to do what? sec. mnuchin: it is a list of everything from prepare technology so that they have the ability, prepare the legal analysis, the transition -- people have hundreds of thousands of transactions. part of this may be coming back to congress and asking you to pass legislation. there may be serious legal issues we are still exploring. rep. scott: let me turn and let's go overseas for a moment. i am very concerned about exit -- about brexit and the particular impact that brexit will have on our businesses, on our financial markets, particularly because of the uncertainty we are seeing around the whole deal of delays after delays and the failure of them to come up with a deal. so what i want to get from you, as our

more about what will remain on the fed's radar in the coming year joining us right now is chris campbell, former assistant treasury secretary for financial institutions, part ofrump administration thank you for being here >> good to be here >> so, this is a sign that all things are a go, there's a green light or is this a yellow light? >> i think the fed's obviously looking at the economy and they see we're in a good spot, relatively good spot and i think they're leaving rates unchanged. it's a good signal that we're going to be in a place where these rates probably to the end of next year >> for so long we've talked about how the fed looks at china trade war, how the fed looks at what's going on in europe. we talked about what christine lagarde may or may not say later today. does it no longer matter >> i don't know. >> was this all noise the whole time >> i always thought so again, i was -- worked the deals, inside deals in washington a long time i think it's always been -- all of this is noise we looked at the long game when negotiating some of the important things of the economy. >> are you a believer, though, any of this has been a drag on the economy? >