libor has been rising. becausen rising regulations are coming in and so forth. shorter returns on three-month debt. is, i don'tout it know if you knew this, a lot of chinese companies, their debt is related to libor. libor rate is debt isng, your increasing. this help investors see big additions to their bills. it's putting pressure on the yuan to strengthen. there were stronger strengthening's in july. -- we should be appear. ok. i just read it. i just lost. mark: keep going. never give up. vonnie: i got my series run. the point being the yuan is strengthening and investors are having a difficult time of it. they are having to pay more. mark: where can we find it? vonnie: you can find it in our chart library. mark: if you were me, who would you give it to? you can't do that to me. i didn't know that connection. vonnie: how did you get my opponent to vote for me? mark: who would you vote for if you were me? vonnie: i would give it to joe, obviously. that point in time that he encapsulates. mark: because you are my boss, a vonnie, joe gets it. you did tell me to

likewise, libor will move significantly higher from where we are now., sally makes the point rightly that companies can take out interest rate protection through the swaps market, for example. but overleveraged companies face an environment which is exactly the opposite of what they faced the last five or six years, which is one of rising interest rates. as a result, you are going to see, i think, overleveraged companies increasingly struggle to service their debts. and that is already starting to be discounted in the high-yield bond market, and it's interesting that high-yield spreads have moved back to andnd 400 basis points, that is the highest level they have been in the last month. guy: a couple quick questions. a massive date of issuance yesterday in the european credit. u.s. purists over here? >> one point is that the ecb is a buyer of corporate bonds, and that is why we have corporate bond spreads in euro tighter than they are in dollars. i think that differential between euro corporate spreads and u.s. dollar corporate spreads widens even furth

and apart from libor you add the possibility of the fed raising the rate at the end of the year, stillishy washy jobs figure we saw last week. so as the yuan declines the dollar goes up and to make things worse --. >> this libor surge is down due to antimarket reforms coming into effect in the next few weeks and actually the ones sticking to the liquid can i. this is actually a credit crunch we saw in 2007 and 2008, is it, this is actually something just market reform driven but maybe the question is, how long does it last? that's the thing. >> so this is, i mean, estimates are for the decline at least, it'll go up at least till the end of the year early next year. but, however, for chinese companies that kind of complicates the whole set because they borrow at libor plus whatever. so as far as they are concerned it is more of a currency player for the chinese companies. rishaad: you're getting whip sawed in all sorts of directions. >> this comes years and years after chinese companies building up huge dollar debt with appreciates -- appreciation bets on the currency which made borrowi

tom: this is important, what is your take on the libor? it is rule changes and manipulations leading to a higher libor. guy: if i knew that i would be sitting on a beach. tom: that is what francine is doing. guy: she is at the aquarium looking at sharks, probably a useful exercise. this cash position, in the beginning of the year, we came off holidays and into the beginning of the year, david, we panicked and the market rolled over aggressively, coming back off summer holidays, a big cast position, how is that cash position going to be put to work if at all? issues, do you use a valuation metrics which are traditional, they do not seem to work now. or do you use -- there is no alternative. when youery seductive are up against a zero interest rate, very seductive. also dangerous. tom: we will continue this discussion. you are a pro, saying you will go to cash. a lot of people cannot do that by prospectus, then you protect yourself with derivative instruments? , thes, where you saw this last two drawdowns come august 2015 versus jen were, fe

then rates started inching and libor. >> no one can argue with what pete and john are doing. he is sitting at a pool and getting out of the stock after buying it for i don't know how much of a profit -- >> i held it for a very long time. >> for how long? >> i started overriding it when the stock crossed 40. i was buying it in the 31 range. never broke 32 again. >> from an investment standpoint, there's nothing wrong with what they're talking about, and i gray that those are the moments you want to buy. you have to if you are going to move significant amount of capitals believe that the obstacles have been removed, one of which i just outlined being warren buffett, and secondarily, you have to believe that looking forward you now have more wind at your back than you previously did. one of the things that i think the financials have to their advantage is the tremendous amount of disbelief and skepticism in the investment community. money managers. they're underweight financials right now. they've been underweight financials. these two gentlemen will have a lot of fun because mo

three-month libor, the white line.he correlation to the off-shore yuan rate looks pretty close to me. libor is being affected by changes in money markets and there are all kinds of factors, but the elevated cost of that story ripple into china and when it goes away, does this story go away as well? you theat is telling yuan is responding to the relative cost of money in the u.s. versus china and some of that is related to money market reform and how that has boosted libor, but a big part of that is .he fed normalization story if you think fed rates are going to go up at some point and you think chinese rates are lower because of the slowdown in the economy which will be coming in the next several quarters, then dollar-china should be going up further. tom: john normand with us of jpmorgan. i look forward to talking about the copper morgue it that jpmorgan -- copper market. in our next hour along with toneth rogoff, we only speak roger altman when the boston red sox are in first place. altman on roger clinton and trump.

libor 275.the libor flow of about a point. >> okay. >> so would an increase in the fed funds rate of a quarter point, then another quarter point, would it materially change anything you're doing in your business now? would it change the things that the company -- your portfolio companies are doing because they might see their lines of credit go from x plus prime to x plus plus prime. >> a business like camping world, yes, because the interest expense on the inventory is a real operating expense. not an ebitda. but the smaller businesses, no. because the amount of inventory is -- i don't want to call it minh mu minimus but it is small. >> your immediate cost of funds goes up to l plus 325 automatic. >> or l moves. >> what would be more material to the business of camping world? a material change in interest rates, the borrowing cost, the cost to carry enveinventory, or barrel increase in the price of oil that raises gasoline to 250? >> this will sound terrible, but for my earnings, it would be th

that has put a lot of up pressure on libor, a two-basis point move and libor can be as much as $14 billion companies, according to goldman sachs. some of these guys are already feeling a 25 basis point increase. david: so the control room has changed the rules. chris, you get to vote by yourself. mr. ailman: i love the boj story, because i think it is very profound, because it is structural. they can't grow the balance sheets through the roof and it would not grow the economy does you could grow the balance sheets through the roof and it would not grow the economy. david: alix wins. we have: coming up, from president barack obama live from the u.n. general assembly it we're counting you down to the open, 34 minutes away. ♪ a jonathan: 30 and it's away from the opening bell in new york city. this is bloomberg . we set up for the boj and the fed decision. markets treading water. alix: any clarity? a little bit of risk taking on it to the markets into the big central-bank decision day. highs of thend the session. no big positions being taken on her jonathan: no, volatility is right down t

there is libor reagan. there is -- libor-rigging. fx reading. multiple regulators -- not just the u.s., but the u.k., the european union -- there is more that is going to come. again, u.s. banks have faced many times more amounts of fines in the last several years. kbw has a tracker. rangein the $250 billion that the banks have paid. it is a lot of money -- bank of america, citigroup, jpmorgan, they have paid enormous amounts, but meanwhile they are making money. they are making $20 billion, $30 billion, despite the fines they are paying. when you can make money, you can deal with the fines. the problem with deutsche is they are not able to make money. they are going through a big restructuring. in that depressed moment of profits, it is hard to come up with $1 billion or $2 billion here and there. scarlet: i'm glad you bring up bank of america -- every cycle quarter was a kitchen sink water. as you said, they continue to make money. john cryan leads deutsche bank and his predecessor wanted to make this bank a global investment bank. he came fro

so libor edge higher.k at credit interests, my question is as you have libor rising and getting that higher yield and wind up having yields continue relatively lower all across the globe is this a green light to go by u.s. corporate debt? >> with loretta lynch say corporate debt make sense. where think investors could look at is the spread curve. because of libor rising, front creditdit -- front end has cheapened considerably. a begin your fed risk at the front end. buy short-term corporate debt that some treasuries you get the yield at the same time. brilliant, thank you could to see you. coming up, the sec accusing hedge fund manager of insider trading. and it had an immediate impact on omega's equity holdings. the chairman joins us that is all coming up next. ♪ emma: it is 7:30 on wall street, he was what you need to know this hour. the ultimate fed rate hike are increasing. a 61% chance in move after december after the fed decided to leave rates unchanged despite three dissenting votes. -- denmark's bi

libor scandal for banks in the u.s. paid out about $9 billion in fines for many relating prices in the foreign exchange market. one huge cartel, opec, has remained a strong force until the market forced countries to act and their best interest. determined to recapture market share, including oil from shale, saudi arabia and other arab producers opened the tabs, sending oil prices down 46% by the end of the year. among those hurt were ok numbers iran and venezuela. the idea is age-old, performer cartels versed emerged in germany in 1870's and spread other european nations as well as japan. it is noted domestic retail's typically emerged in industries with high fixed cost under record of competition. steel, coal, fertilizer, aluminum. here's the argument. cartels face moral and legal hurdles today, the ubiquity's throughout suggest attempt eradicate them entirely will fail. they face a threat that will never go away. teaming on the cartels rules by members who can't suppress the competitive side. this recently happened in

mark: this leads to the question will the one-month libor raise up question --? . -- raise up?t depends on how many choose to roll over securities. that's lot of them do, going to roll over to the one-month rate. that's going to create more pressure and we will see the rate rise again. mark: sally, great job. thank you for bringing the story to us. thanks. it's time for our latest look at the business stories in the news right now. the atlanta fed president. down at the end of february. civic work to pursue and private business. the search will begin to find his successor from a diverse group of candidates. wells fargo is taking steps aimed at preventing another scales sandal. they are eliminating sales goals for retail bankers. fined $185 million because employees opened accounts without customer approval. they fired 5300 employees involved in the case. we've made fundamental changes as a result of our findings, taking disciplinary termination to employees who were counter to our values. we had our own internal investigation. this did not happen all at once. it took place over

reform had many market that goes into effect in mid-october and that has led to a run-up in libor whichffected the commercial paper market. is aommercial paper market critical source of funding in a short term and that is up about 40 basis points over six weeks or so. that provides headwinds for corporations, so i think the fed is aware of that. thelet: does it constitute conditions the fed will fold into its decision? yellen hasink chair been clear that she is taking into account what ever data they need to take into account. that clearly includes asset markets and lending conditions. if you look at recent fed including ands, where 40% ever spawned into the last survey said they were tightening conditions. lending standards are starting to tighten. are we seeing what's happening in the u.s. naturally they are trying to force in japan? they're going to go more negative on the short and then longer and rates are rising. i have one-month treasury bill rates here on the terminal and you can see we are down 2.1% ahead of -- down to .1%. sure if there is an analogy there, but it is interesti

if we looked at libor, it has risen because of money market reform. in matters less why it is rising and just that it it is rising. does this complicate matters come december? >> it will a little. in december they will thinking about the impact on the coming year. so i think about more as another in matters less why it is rising and just that it it is rising. does this complicateway -- reasr december. as you look ahead to the janet yellen news conference, what question do you think will be asked but probably it is thee asked? >> following. every central banker in the world is talking about the natural rate of increase, and the paper by a colleague about measuring the natural rate. i wish someone would ask whether she has noticed the first conclusion of the paper is measurement is so uncertain we should rely on the natural rate less. >> we have to show a dazzling chart for radio. out to a major shout michael mckee, who has done great work. i am thunderstruck by the dispersion from bullard in the regime with a very low rate, and 2%.outlier high rate aro

add dollar libor to the list affecting the yuan a surge in the u.s.orrowing benchmark maketing more expensive for chinese companies to service more than half a trillion dollars of debt. how big a problem is this? is it really threatening to derail the sort of fragile stability policy makers have managed to forge when it comes to the currency? >> china is a real conundrum. though it is half a trillion dollars, enough to destablize most economies around the world, that is $580 billion as we were talking earlier, more than three times the fx of mexico, twice that of russia give or take. so it is enough to kind of drive some sort of instability in the markets. but the key point here is that this restatement, need to repay the dollar debt before it balloons further is kind of crimping the monetary policy and capital control option. so they're not able to ease capital control because then you could see a flood of money flowing overseas as we've seen every time. it's been more than 0.3, 0.4% the dollar goes up. we see huge dollar demand and it drives the cur

they have the libor and ethics matters. in russia -- they have the libor and fx matters.matters with the d.o.j. there are a number of legal issues deutsche bank is facing. they have said they want to knock them out as soon as possible. it is not just this rmbs matter. david: when you said they want to settle as fast as possible, that is not a great negotiating position. what ramification does this have for dividends? he was he took over, adamant he did not want to raise capital and thought it was not in the best interest of shareholders and pointed out that is not solve some of the profitability and growth questions for the bank. for 2015cut dividends and 2016 hoping to reinstate that in 2017. but that has not been enough to they are taking on restructuring charges and legal provisions have inhibited the build of capital. on one hand, you have him not wanting to raise capital. it on the other hand wanting to get these issues behind them. they have said there are a variety of issues. management has said they want to get the biggest ones pass them in 2016. that has been hel

and then libor rose sharply and then on the market and then they froze up. that is what happened but now people believe the connected this was a major problem for the crisis while investors hold of primary fund let's remember it was less than a penny on the dollar nl financial institution is a result of the failure of the men. but none exposed to aig had failed. with the maximum 18 percent loss of capital was then the conventional 25% low moss secured lending limits and that does not even take account that further projects from loss. so coming now of a connected this problem so dog frank starts to focus on this. -- doc frank starts to focus on this of the designation of connectedness as a central clearing to neutralize the losses to average reaction failure so now what will argue the reforms are desirable to be apart from that experience but connectedness was not so we did something else which was to legislate with respect to contagion they were trying to stop the contagious run on the bank as a lender of last resort of capital injection sinbad bank but the

libor really spiked in the financials and the elevated levels that we're looking at.t look that significant, however if i put it into a five-year period, you can see what we are saying and that is a big the cup at the right hand side of the chart. how many questions are you being asked by your clients about money market funds that changes the rules that are coming in october? are we experiencing some liquidity crisis that has -- wayne: the first point of the question is around the money market process that is going on in the u.s. it is a huge change for the industry working with a thinktory effective, i what that is not showing is there has been a shift of assets that have been very comfortable in money market funds that are now moving out of the money market fund shelter and moving into short strategies by short debt. both from anve asset owners perspective, as well as from a good response point of view which moves -- which smooths out the money market reform. that has some influence. what is interesting is the unintended consequences of something like this. you can

can see this, but i have a chart on my bloomberg showing the highball, the hong kong equivalent to liborms to be defended by the chinese authorities. we move into a new world of central banking policy. what can the chinese do? carl: they seem to be letting it go. the chart i like to look at is the trade-weighted yuan rather than just the dollar alone. -- it isfocusing on more a standard deviation below its recent trend. that signals that maybe the chinese are prepared to let the yuan go cheaper right now. they are seeing the benefit. experts are up four points at -- 4.5%. in a shrinking world economy, they are doing better than most. they probably feel their currencies helping them get there. guy: back to the conversation we had earlier on. is that what we can expect more of? are ending up in a period where central banking steps up, are we going to see much more of this? will they let it go significantly lower than where it is now? carl: the central bank, the g7 will see higher interest rates at the end of the yogurt. canada, exception of which is a commodity producer. we will see a chea

sanctions violations, libor, and we are taking a comprehensive look at the biggest banks -- >> okay, thank you, i have 17 seconds. i just want to say, in closing, what a wonderful job the occ and especially cfpb did on this. this is why they are there. and i very seldom hear great things about cfpb. >> janet yellin, the q&a continuing in front of the house financial services committee. and in the meantime, ahead of the imf world bank meeting, the health of the global economy is clearly in focus. let's get to our own sara eisen, who's live with the managing director of the imf. hey, sara. >> hi, good morning, carl, good to see you. we're here at the kellogg school of management at northwestern university, with madame lagarde, who has just given a speech on the global economy. i'll let you sum it up for us ahead of the big meetings next week and a widely anticipated forecast on the global economy. sort of weak growth. >> i would call it modest, we have modest growth. and we have modest growth, because there are modest policies. we are very strongly advocating for more vigorous growth,

this is usd, three-month libor. chartit has been rising quite aggressively. financial conditions are tightening. discuss, discuss, discuss. the things i look at -- >> the cost of corporate debt has tightened, particularly since the middle of february. guy: what is the fed me to do it? >> because we are very late in the cycle. interest rates are too low for where we are and we have unemployment allison 5%. traditionally this would be quite late in the cycle. guy: you aren't going to accept the phillips curve to be working. darren will stay with us, joining us from invest tech. caroline: great discussion. coming up, from the boj to the fed, will talk the other huge central-bank meeting today as two of the fed's primary dealers warn of a shock hike. plus, nigeria's crude reality. in an economy battered by low oil prices, we get a rate decision from africa. we get what to expect. still to come, in the world of volatile markets, is a time to get physical? we hear the case of commodities. this is bloomberg. ♪ caroline: 50 minutes of the market open. let's get your

the libor is up sharply. who is buying commercial paper? they'll figure it out. i'm not -- my own sense is i would like to see rates higher sooner, but how is the market going to react? you see the ten-year up 1 70 yesterday and up from 155 to the degree that you are discounting the future stream of earnings. if you keep the earnings constant, then that's a problem. the market should not do well due to the degree that you then argue they will have a growth initiative in the economy even if interest rates go to 2%, 2.5% if inflation picks up. it's a lot of dots, and i think the market short-term will do whatever the market does. see you later. >> mario, thanks for coming in. >> good-bye. >> he so you on the desk. i know we will soon. viacom comments. >> well, he talks about waterfront and then rich was talking about the idea that cbs would make a lot of sense. there's a lot of reasons why you could understand where ann arboro is sticking with that trade. i have been in fox a and skr bs, and right now this is the one that's got the most pressure on it, the least pe

alix: thank you so much, elisa martinuzzi. 47 civil actions are still pending for libor alone. the coupon payment question is really front and center. jonathan: people are repricing that cash call. we will cover that throughout the morning on "bloomberg ." line heighta, cure is standing by as eu leaders convene without the united kingdom -- caroline hyde is standing by as eu leaders convene without the united kingdom. caroline: on the agenda is whether they make any categorical action today at all. don't hold your breath. we always know when it comes to the eu, they are slow in terms of action, but the rhetoric is heating up. we hear from the likes of the nde, saying this is a crisis of the you's existence -- the eu's existence. we are hearing from the likes of belgium, saying this is an ongoing movement of truth. even hearing from merkel in germany, she herself has said it is a question of war and peace. will they today unfold much action? probably not. but there will be an outline for a roadmap. cackling immigration -- cattlign immigration -- tackling immigration. tacklin

this is hibor a little bit like libor what it is in hong kong. the mostn hong kong since january. there is speculation that china's central bank was fighting to -- tom: let's set up wednesday with the fed and the big of japan and they are linked to the wish of the strut a million times. can we go with each fed meeting -- here we go with each fed meeting. we see where we are on the two year yield. the major messages in the center of the screen in that rollover of the circles over the recent 1, 2, 3, 4, fed meetings and some of that is due to the economic malaise. tom, i also had something that i had to work on. if you look at the terminal, it was the correlation between vicks and yen. you can see that correlation is not as correlated as used to. that chart very shortly. joining us now for the hour, chiefbevan, he is economist at hsbc. thank you so much for joining us. james, if you look at the boj and the fed, it is an awkward timing. the boj on the morning of wednesday and the fed later on. boj becauseould be if you look at traders, they don't know to think. james: the boj looks l

chinese companies to pay back loans in dollars to go offshore to get dollars, particularly as the liborgone up for various reasons. how big is that and what is happening? >> there is a longer-term structural issue of course. attack and speculation about when the fed hikes. that is noise in the system. i think there is a fundamental, long-term pressure on the chinese in the sense that a lot of money look for assets offshore and that may not be in line at least at the same pace. >> put aside the noise and get to the signal. what is it you're looking at most importantly to determine that what you say, the chinese economy picking back up again? the retail can see numbers and enjoy the trade numbers, we like trade numbers quite a bit because it is one of those you're pretty sure we're massaging to their benefits. leading indicators where you put a dozen indicators together from retail space and this sort of stuff. there is a raising -- a recent think we're moving slightly higher. we will get back to 8% growth. it is stabilizing slightly higher. that was a chief global economist on bloomberg

libor todd dollar risks to the yuan. making it more difficult to service half $1 trillion of debt.this threaten the uneasy stability china has managed to build? robin: to put things in , chineseve, haidi. companies have an estimated $580 billion of debt. that is more than three times the fx reserves of mexico and double the fx reserves of russia. that is a problem. the more yuan depreciation there is, the dollar goes up and costs go up, forcing the pboc to take policy steps it did not necessarily want to take, like easing up capital controls. it cannot ease too much, because then you would see a flood of money leaving china. it is a definite risk to china's financial stability at least. -- could ituch really get much worse? should these companies try to service the debt while they can? robin: it is a vicious cycle. the more they try to repay dollar debt, the more the yuan is forced down, making the dollar debt more expensive. so as the fed prepares to raise interest rates, we had a bit of report last week that can provide a -- did not provide a clear direction. but the odds of a ra

>> i think so and i think volatilities are rising in the gap between riskless and risk is the libor spreadis restating the price of risk. are now two categories of things thanks to basel three. level oneiskless, assess where you get paid no matter what and you have a divide going on. 0 tom: let's bring in guy johnson. >> people may not want to live in frankfurt and may not want to live in warsaw. trying to persuade bankers to live in poland but simply to the people will not simply move. there is an embedded infrastructure story that i think take a long time to unwind. who is to say that a decent deal cannot be done? why does this have to be doing and gloom? >> that may happen but we don't know so uncertainty rises. i would agree with what you have said about the current situation but if you have the uk's and position, what is the new position going to look like? norway? switzerland? iceland? whatever it looks like, it will be different than where it was before the vote. deferrals of capital investment in the city in finance and we have so many open questions now from brexit. defense is fin

sanctions violations, libor. >> so steve liesman, i put it to you, steve, is this a thinly veiled or not so thinly veiled basic messager signal to lawmakers, hey, start digging into banks? >> you mean lawmakers or regulators? janet yellen at the recent news conference said that it is go to be a new focus of the fed supervisory work it does. it is because of all of the violations that are out there and their concern is that senior management is not well informed as to what is going on at the banks, not prepared. she just actually said another thing, brian, we haven't had a chance to cut yet, but in the hearing still ongoing, she said that senior management should be held accountable when asked about wells fargo. >> yeah, exactly. that was something a lot of people picked up on. the question is whether it is more than just accountable. we heard there will be forfeit of pay. that's with senior management. is there something more the oversight of these banks should be on the oversight committees. even though the ceo is giving out pay this took five years to be noticed and stamped out. th

in the 3-month libor i would say is relative.te bonds are set on that. 30-year mortgages are set on that and risen last two or three months. >> yeah. right now, the 30-year at 2.4%. but to your point, evan, stale bit of room to climb. >> thing is, people -- it's one of the things people are just waking up and people today who bought the tlt, the long end of the bond curve yesterday are down whatever they expected to get in yield over the course of the next year. >> bill millie tells a great story of the last time around and people woke up one year and realized to lose money on the bonds. >> don't worry. >> michael, kathleen, thank you both for joining us. >> thank you. >>> does today's sell-off signal trouble for the street? a big bear joins us with how to invest in a down it is turn next. >>> interest rates meant more affordable mortgages. if the fed raises rates, will that push them out of their tight range? hey! nikki! what are you doing here? you tell me, stephen. what? i'm snapping. you've been streaming my videos all mornin

the real story that is getting diverted from is the moving libor.consequence in this country that we are seeing. it will raise borrowing costs for companies, for consumers. it is very disruptive. that is the sort of thing to freak out the market and the market has been very quiet and focussed on the wrong things here because of it. it also means potentially higher rates are good things for financials. maybe not deutsche bank but smaller banks that may benefit but are weaker because of this head wind. >> quite a week for apple. is it back? would you buy it? would you wear air pods? >> you have to ask yourself -- >> i think they would look smart on you. >> no shot. do they just blow up the dating apps. i have to tell you guys and gals if you have air pods in your ears you have no shot, zero. mail it in now. not that you have to worry about that. sarah, you need not worry about that anymore. for the folks who are single don't put those in. not cool. with that said, stock bounced and got up to 115 level, levels broken down from before. i think the eupho

you had libor fixing. you had money laundering. you had robo signing.ll of these scandals, and, sure, smaller -- lower level employees, sometimes, have to face the music. but what very senior executive has been hauled into court? none. except in community banks. and that's just not right. >> the big banks, that does not seem to be quite as endemic to the smaller community banks. what is wrong with the culture there? >> i think it is transaction driven. it is driven by stock price. it is driven by monetary rewards. it is a culture that thrives on -- we have to have a better stock price tomorrow than we did today. it is a culture that thrives on outsized performance bonuses and that kind of thing, which is not the culture of community banking. >> back to your initial point, too big to regulate, too big to manage, it is not a far leap for me to assume you think those big banks ought to be broken up, do you? >> i think -- i think the regulatory authorities need to take a look at can a ceo and executive team effectively manage and set a cultural tone that is

and bis of dollars in variable rate mortgages that will be re-set at the end of the month based on liboranother wild card in there. if they want to do something this year fine, but aim for december. september could be a dangerous month to do anything of this stuff. >> -- any of this stuff. >> that's why people have been bullish on three month lie bore because they've been positioning for the move. we heard governor tarullo acknowledge there are opportunities for frothszyness in the -- frothiness in the market but he said the answer is not to raise rates. what is the answer? how does the fed or anyone cure frothiness? >> i think you've got to see where it is occurring. the signs of frothiness, equities, the nasdaq is at an all-time high, but away interest certain pockets of the real estate market there's not a heck of a lot of frothiness around. it's been a surprisingly firm summer, but, you know, turned out not to be sell and may and go away but sell in may and ruin that day. it has not worked out. that's again because of the fed. many of the seasonalities in others things have been turn

alix: how much of your investment is tied to libor? is just an added bonus. you have seen that spread wide and. -- widen. if you're a bank loan investor, that is a benefit. as an owner, it is a higher expense from the corporate aspect of. from the fundamental perspective, it is not an issue. if the concern is growing over possible credit risk, does that drive you towards collateralized debt? jonathan: we would not say this overpriced. this is a relative value world. a couple of things in emerging markets maybe -- on a relative basis, we find some interesting opportunities in assets that are more securitized rather than just securitized by corporate assets. think about securities backed by student loans, the issue about student loans, the securities were the government guarantees what you are getting a pretty attractive spread right now. there is a good risk premium there. the actual fundamental credit risk is quite low. could get a downturn in the economy in the credit cycle and be just fine. you will not get rich, but you will not get

we're about to get a move up in libor.kets are going to change in the middle of october. there's a lot of destabilizing things out there including the election. so they should wait at least until december and maybe not even then. >> one last bid on what's leading all the papers today, that income data from yesterday. did that move you at all? >> not really. you know, it was nice to see. it may change a couple of political speeches. but as sarah pointed out with schwarzman, doesn't explain broken out. >> art, thank you. >>> when we come back, baseball's all-time ironman, cal ripken jr., talk about his success on and off the field. stay with us, you're watching "squawk on the street." >>> not one but two traders making the case to buy apple stock right now. find out how high they think it can go at tradingnation.cnbc.com. more "squawk on the street" coming up. it's not just a car... it's your daily retreat. go ahead, spoil yourself. the es and es hybrid. this is the pursuit of perfection. >>> a calmer day in the bond market

libor is up to basis points. that's tightened the cost of capital.interest rates. >> that kind of paves the way for the fed. if we're already seeing interest rates rise, then it's not such a big deal if the fed raises rates. >> maybe we should blow out the deficit. just do it. we've got david malpass coming up to talk about trump's plan. geez, go to 15%. small business and big business. do the maternity leave. blow it out. that'll get the bond market's attention. >> there's no question. there's no question. >> we won't end up like japan. again, they're like -- it's not working. three years of this and it's not working. blow it out. >> we are seeing some sentiment start to creep in around the world that says monetary policy can't carry the ball all by itself. fiscal policy needs to do more. i think you are starting to see a little bit of that. people talking about maybe fiscal stimulus in the u.s., in europe, in japan. >> the journal says you're not going to -- there's a great line in the last paragraph. you're not going to cure stagnant growth by fil

sanctions violations, libor and we're taking a comprehensive look at the biggest banks. >> all right.as thank you. 15 seconds. i want to say in closing what a wonderful job the occ and especially cfpb did on this. this is why they are there. i very seldom hear great things about the cfpb. they did an amazing job here. this is huge, huge win for the cfpb, redoubles my faith in that agency. thank you. i yield back. >> time of the gentleman has expired. the chair recognizes they gentleman from california, mr. royce, chairman of the house foreign affairs committee. >> thank you, mr. chairman. thank you, chair yellen. good to see you today. i had a question to follow up on mr. guinta's point about the unprecedented consolidation that we've seen in community financial institutions wherere there are fewer and fewer of them and these smaller, these smaller institutions have fewerf assets over which to spread their ever-growing compliance costs. so, they often seek those economies then through mergers. and that's what leads to this conundrum now of situation where we've got fewer banks today tha