here is what she told mike mckee. >> the most recent meeting i did express my view that i thought it was time to continue the process of normalization of interest rates. when i look at where we are with the job market, when i look at inflation, our forecast for that, i think it is time to move. should you play the uncertainty around fed policy? joining us now from chicago is andrew slimmon. andrew, does it matter to the stocks that you hold in your fund whether there is a 25 basis point increase or no? >> absolutely not. ofesther one. if you look at this chart, you will see volatility will rise in the next three to six months. at least traders are betting on that. would that be helpful to inestors, particularly places other than large cap? >> to me, the market is sending a strong message. in comparison to last at this time, small caps were woefully underperforming the s&p, which was underperforming a few of the large-cap stocks. are year, small caps outperforming the s&p, which are outperforming the mega-caps. generally, when small cap are outperforming, that means the market is anti

with: that is mike mckee jerome at the jackson hole conference. the conversation they were having about inflation, how thatnor powell thinks reiterating a lot of what we've heard from that officials. -- fed officials. very data-driven. consensus is inflation will move back up to 2%. there is still slack in the labor market. there are people who want to get back into the labor market. these demographics have something to do with that, there are people who want to work or work more. are two hours from the close of u.s. trading on this friday. rami has more on the markets and on blackberry. i: we have news coming across the bloomberg terminal. blackberry is still declining comment on that trading halt that's been happening for the past 10 or 15 minutes. blackberry is reporting a redemption of existing convertible debt. 6% -- 3.75% in terms of those that subtractions subscriptions. we will continue to get more information on that. blackberry shares are still halted right now. let's go to the majors. spoken atyellen has jackson hole, we are still in ne

here he is earlier this morning speaking with mike mckee.kaplan: the anticipated that the rates going for will be much flatter. we have a number of persistent headwinds. even though i do think in the near term the case for removing some amount of accommodation has been strengthened, that's in the contest -- in the context of a slower path of rate increases. for business people and people in the markets, in the path of rates is just as important or more important than the exact timing of when the next move is. michael: do you think the fed has a communications problem in getting those views across? what you are saying is the consensus on the fed that you have people interpreting the remarks of various fed officials over the last couple of weeks as someone says raise and someone says stay and no one really knows what's going on. robert kaplan: we all have to improve our communication. you have to understand when you give a speech or an interview, a snippet of what you say may be taken. it may make it look like there is more debate on certain i

mike mckee filed this report from jackson hole. some of whatt got it wanted from this conference. while she did not put a timetable on it, janet yellen said that economic data has improved enough that the case for an increase in the federal funds rate has strengthened in recent months. that led investors to dramatically raise the odds of a rate move in september, or definitely by december. stocks fell and bond yields rose. other beneficial back that view. >> we are being patient and a bit cautious. demand is weak around the world. central banks are cutting rates. we are below are target and growth has been -- it was 1.25% in the first half of this year. i think that our caution is appropriate. >> still, she cautioned that the outlook is uncertain. knowing where rates will go ultimately is quite limited. that raises the question of what a central bank or does to fight a recession when rates are so low. that is the topic of this conference. a former fed staffer who is now at carnegie mellon university proposes nominal negative interest rates. >> i am talking about making the case fo

withyou will have to check mike mckee, who has tested every bar in new york. e minutes. never before has everyone been such a jumble. the fed has a credibility problem on wall street. there is a lack of consensus about what they should do but what they are going to do in september. consider the number of said speakers -- bill dudley kicked it off. he is important, because his views carry a lot of weight. he says september is on the table. rob kaplan spoke from dallas saying i do not know. john williams said sooner rather than later. jim bullard of san luis say that year. dennis lockhart says september. what are you supposed to do? you mentioned the fed minutes. look at the wide range of views in the fed minutes. remarkable for their lack of clarity. john williams said last night that it sums it up. that that is how they feel on the committee. but williams added, and this is what people are watching from him -- the lesson of history is if you leave the punch all out too long, usually the police break up the party. tom: i will go with that. but bring up the dots

credit to mike mckee for pointing this out and tweeting it out earlier.rrow indicates when the and took the u.s. off the gold standard. dollar.loating the said it would be temporary. that temporary has lasted 45 years. it was called the next in shock. >> that is fantastic chart. some argued that taking the u.s. off the gold standard meant there was no discipline or checks and balances on the federal reserve, and that we are we are indicament because of that. >> and the dollar would of been destroyed. scarlet: and we are trying to get to 2%. oliver: the long trudge. we are looking at how hedge funds are faring, dollar versus yen. we are looking at contracts and betting on that. you can see this took a bit of a dip. bank of japan did not quite meet expectations for stimulus. thettle bit of a dip in yen. hedge funds say they think the strength is going to continue. disrupt thiscould over the next month. the fed in september, bank of japan also looking to see where they can come up with more stimulus. but that has been the story of late, that kind of reversal

mike mckee live at jackson hole with the details. michael: janet yellen has a message for you, she hasn't put a timetable on it but she says economic data has improved. increase of aan federal funds rate has increased." it is the most optimistic and direct janet yellen has been on rates in quite some time. the labor market has improved and inflation, while still low, is still subject to the transitory effect of energy. yellen goes on to caution the outlook is uncertain and that policy is not on a preset course. the fed's ability to predict where rates will go is limited, because she says disturbances continues to buffer the economy. yellen adds the federal funds in the longer3% run. that is higher than most people would put it. much of the rest of the speeches on the fed policy actions and how they have -- actions and recovery. yellen goes on to say that at this point we need those tools going forward, although she says the fed is not at this moment studying the idea of targeting higher inflation or nominal gdp. she goes on to talk a

scarlet: that was kansas city fed president esther george speaking with mike mckee.yellen begins speaking tomorrow, i will be on theg fed go bloomberg, the one-stop shop related to any fed news, for our viewers and customers. this is where you see the different events, news stories, program,n the qe 3 long-term bond purchase charts. i am going to take a look at who else is coming up. tomorrow, we have janet yellen speaking at 10:00. after that, it is radio silence until august 31, when boston president eric rosengren speaks to a financial conference in beijing. as people debate whether she will say very much, that will be market moving tomorrow, that will give any indication as to whether september is a go or december is more likely, you will not get much of a follow-up for an opportunity to clarify until much later. matt: she will talk about the tools the fed can use in order to drive policy. that is the theme of the speech. ethan harris, who worked at the federal reserve bank of new york for nine years, he was the assistant to the president, now at bank of america

mark: the question of the day that mike mckee has asked all these fed officials, the new tool rates.est, what is the long-term neutral rate from where you are sitting? mohamed: it is being impacted by things we don't fully understand yet, including productivity and investment behavior. but it is certainly a lot lower. we have does not mean to continue to focus just on the fed. reasons why it is slower is because of a given event -- because other government agencies haven't stepped up to discuss policies. mark: what about inflation? it has been discussed ahead of jackson hole. suggest or even should boost its inflation inflationghting is war seems to be last year. this inflation war seems to be last year. : i would not for the following reason. the fed is having difficulty reaching the current inflation target. that is no -- the notion it could reach a higher inflation target goes against what is happening. changinge you start the inflation target you open yourself up for political and -- political interference. thing the fed wants right now is to threaten its political autonomy. so i

mike mckee is standing by great now. mike: thank you.e negative interest rates in place around the world. what you're talking about is something different. it is a way to make that works it is not advance the groups that are hit. what is the difference in what you're talking about? >> i am talking about making the case for an encumbering nominal interest rates in a note -- negative direction. central banks have the capacity to move rates below zero to a greater extent than has been possible. the reason i am talking about that is central banks have no choice but to follow. what we call the natural rates of interest that are governed by forces beyond central banking and they have fallen from 4% in the 1990's to around 0% due to some factors we may getting to in a moment. it is about moving short-term interest rates over the business cycle. right now we are in a situation where we are near zero and we have a major recession in the advance world central banks would be encumbered by being unable to move their short-term nominal interest rates

mike mckee reports from jackson hole. wall street got some of what it wanted from this conference.hile she did not put a timetable on it, janet yellen says economic conditions have improved enough that the case for an increased funds rate has strengthened. that led to investors to dramatically increase the odds of a rate move in september, or definitely by december. other fed officials back that view. and aare being patient bit cautious, because remember, demand is weak around the world. other central banks are cutting rates. we are below our inflation target, and growth was 1.25% in the first half of this year. i think our caution is appropriate. >> but yellen cautioned that outlook is uncertain. the fed's ability to know where rates will go ultimately is quite limited. that raises the question of what a central bank does to fight a recession when rates are so low, and that is the topic of the conference. --ormer staffer at carnegie a staffer at carnegie mellon university proposed an intriguing idea. the case for on encumbering nominative interest in a negative direction. the fed

mike mckee with a preview from the fed minutes from meeting. the odds of a fed rate hike for 2016 finally above 50%. any clarity we will be able to get today? said the july statement the near-term risks to economic outlook had diminished, but it's not provide any warning that a rate increase was imminent. we did get that yesterday with dudley and lockhart. we have pulled forward the timing of the next great move from march yesterday morning to december today. you look at the chart and it defines market schizophrenia. maybe the minutes will give us some clarity as to fed thinking. who is on what side here in the debate? at this point, people don't know what the fed is doing. dudley encompassed the fact that that that might not even know what they're doing as well. you are mispricing and imminent rate hike, but it is still lower for longer. are we looking at a total rethink of fed policy in the fed? mike: it is not a total rethink, we are getting very close to it. sheets the fed's balance since the beginning of the crisis and nominal gdp, they pu

mike mckee reports from jackson hole. >> wall street got some of what it wanted from this conference. well she didn't put a timetable on it, janet yellen did suggest that economic data has improved enough that the case for an increase in the federal funds rate has strengthened in recent months. that led investors to dramatically raise the odds of a rate move in september, or definitely by december. stocks and bonds rose. others are backing the view. >> we are data-driven, but we are also patient and cautious. demand is weak around the world. other central banks are cutting rates. we are below are inflation target and growth was 1.25% in the first half of the year. i think are cautious appropriate. >> still yellen cautioned that the outlook is uncertain; there is no preset course for rates, and where will go ultimately is limited. that means it is a question of what the central banker does to fight recession when rates are so low. that is the topic of this conference. a former fed staffer now at carnegie mellon proposed nominal negative interest rates, a controversial but intriguing id

let us think about what we are going to hear, build on what mike mckee was reporting.et's bring in the chief economist, who joins us on the set in london. great to have you on the program, megan. i have had a few people contrast they will be might hear from janet yellen around the short-term and the direction of interest rates in the u.s. and the more long-term, maybe hawkish about the short-term, dovish about the longer-term. we will read into that. megan: i think it is important to remember these fed conferences are incredibly academic. we had a few instances where they have actually provided some policy inside. i think it is pretty unlikely will get anything from janet yellen. as michael mentioned, we are from, theslew of data meeting and the most will probably get is data dependent. and they will be watching the data carefully. i think that the market is slightly disappointed that we saw the dollar flat today. i don't think it will get much chance from janet yellen's speech. anna: we have a great story on the bloomberg day, master of the aiverse, lummox by the fed,

tom: the deadly news yesterday -- mike mckee were on radio live when that news came out.oves tell you, he really the market. this is.how skittish but the number one story is the are thef cathay pacific challenges of asia and china. if you go through the headlines -- forget about hedging. it was a grim report. ceo,ine: and certainly the who has been in the job for about two years, is under pressure. we will speed to him in half an hour. let's get to the bloomberg first word news. taylor: donald trump is shaking up his struggling campaign again. bannon to behen the new ceo. kellyanne conway will become the campaign manager. all of this is seen as a motion for paul manafort and a sign that trump will stick with his aggressive style. to -- for the people arrested during the coup attempt. some 38,000 people will be released, including those who showed good behavior and have less than two years to serve. 35,000 people had been the kind -- detained for questioning. angela merkel joins the campaign jet -- trail again. it is less than three weeks until the election in germany's ea

mike mckee appreciation society really gets the momentum in about 15 minutes time when new -- we bring the federal reserve a jackson hole kicks off. 1969, elton friedman, the optimum quantity of money. i hear the tom keene was the ghostwriter for that essay. very important one. helicopter money conversation will be discussed. tom: i am dazzled by your knowledge. jonathan ferro, is rfid becoming like the bank of england? -- is our fed becoming like the bank of england? >> exactly. under greenspan, what were we used to? tom: dissent, francine. francine: it is interesting the way the mpc was put in place. they always have one or two foreigners that sit on the board. tom: adam posen. francine: maybe the fed -- i know some efficient at the moment kind of the present the international voice, but maybe something they should think about. tom: jonathan ferro, thank you so much. joining in a matter of 19 minutes. in washington, clearview energy partners. i look at oil and the dynamics right now and i see one big microeconomic ambiguity. what happens if price goes up five dollars, what happens if

mike mckee live at jackson hole with the details.sage for you, she hasn't put a timetable on it but she says economic data has improved. increase of aan federal funds rate has increased." it is the most optimistic and direct janet yellen has been on rates in quite some time. the labor market has improved and inflation, while still low, is still subject to the transitory effect of energy. yellen goes on to caution the outlook is uncertain and that policy is noon

for more, we turn to mike mckee. three things that i'm aware of.and on thursday and jobs numbers on friday. we will have some impact on sustained rates around the world. those three are the ones we will be looking at. and the fed could be the most important player of all. that will be what we are all watching. and it is supposed to be a strong report. the president of the dallas fed said they got a couple of strong job reports and september is on the table. david: let's also do him for a moment. >> september is very much on the table. we will have to see how events unfold. it is too soon to jump to a conclusion on that. one of the things a have learned as a central banker is that you have to be patient. and we have time to make a judgment between now and the september meeting at want to vantage of that time. two job reports between now and then, we get the benefit of that information before commenting. david: i feel like i have seen this before. table --ble, on the but markets do not believe it. market seemed to prevail. why would this be different

you want to tune never day 7:00 and 10:00 eastern for "surveillance" radio with tom keene and mike mckee ow, adam joins us at a.m. eastern time. jonathan: after a big bank of england decision, we're looking forward to that. a contracting economy and one northeastern province contract 1% but growth in expect of the countries ticked up in the first quarter. for more on the divergence, a chief asian economist joins us now. i'm used to talk about a fragmented eurozone but china is on a very less critical decision but we are seeing an increasingly fragmented economy in that country. why? find itred to europe, i a divirtue generals. in northern part of the country, they are dominated by steel sector, energy sectors and also by state owned enterprises that are not as efficient as the private secer to. then you see all the external hocks. so actually, i think that there are specific sectors in the enterprise problems and that's the reason why we see huge divergence in growth. jonathan: on the question on divergence, looking in to the country at the moment, you see one province contracted by 1%.

he is with the council on foreign relations and michael mckee is going to give us -- when is your next book out? >> january 10. tom: be there. mikeprimer on yen. a they are calling it stimulus package. but it is not. point 5 trillion, that is $74 billion, they are going to to get the daycare help women into the labor force, infrastructure spending largely high-speed rail and cruise ships. also, some money goes to small business and some brexit relief. take a look at the jgb market, the bomb market -- on the market in japan. tom: can you show us that? >> let's see if we can get it up. since the bank of japan did their thing last week, the orange line shows where they yield today. the yellow line was just last week. they called it the widow maker but it is now working. the whole market has moved up. >> what will be the spots -- the response of the government? is not clear because what the market seems to be saying is we are missing the third arrow. you can see what is wrong with japan in just a couple of charge. how fast you can grow is how faster labor force is growing. the orange line's labor force, the white is productivity and

mike right now who is tracking twoer areas to focus on. >> we have the bay bridge toll plaza. also in san jose we talked about that issue on 101 and mckee. the update from chp. and it was following our traffic pattern. in the northbound commute direction. there is metal debris and flat tire reported in the area. activity is off to the shoulder and sounds like the debris is cleared from lanes. be careful. there may be more activity and more cloe slowing from story road to mckee. then you're clearing up by 880. the live look shows you that volume of traffic kicking in for san jose here as well as the bay bridge toll plaza where the metering lights are on. no surprises for that particular backup right here behind me. >> mike, thank you very much. >>> coming up, a couple drops their dog off with a sitter only to found out hours later the dog is dead. a popular app being linked to the pet owner's nightmares. >>> the hack of the nsa looks more legitimate and the news is getting worse. we'll take a look coming up in business and tech. ♪ maybe almond breeze tastes so good because it's the only almondmilk made with california-grown blue diamond

mckee on that fed falling dollar. i want to start with michael, our editor. mike t not only dollar yen. it's also the swiss, seeing the highest level since brexit. when was the trigger for the weaker dollar? >> the fed is obviously a component in all of those moves john's talking about, expectations and futures trading haven't changed. traders say technical are at work. and a lot of maturing treasuries should put about $30 million in the market because it's not just the yen that is getting stronger today. ut the fed an issue. he thinks the neutral rate has fallen so far that you can't cut rates enough to get the inflation target of 2% that the fed's been looking at. he says a rethink of fed policy is in order and relatively soon because we can wait for the next storm and hope for better outcomes or prepare for them now and be ready. he suggests raising it to have some psychological impact on the markets. alix: it was a really fascinating essay and he's not only the one. charles evans saying we've got to see the whites in inflation's eyes before we hike. what kind of trend can we see bui

mckee. [laughter] alix: never. jonathan: let's cross over to guy johnson, one week of weekbrexit data and a big end tough on sterling. guy: it relates to the story mike about, positioning on sterling has been incredibly short. data has not been terrible, but the data doesn't really tell us very much. we have had a retail number that probably has more to do with the weather, employment data that is probably pre-brexit, so it is not a lot telling about what is happening but the market has gone short sterling. if you think about it, what did we see this week? a short position on sterling. people watching what is happening with the dollar. it has come down, so that is the other side that makes it a little ponderable, so maybe some of the extreme shorts are coming out a little bit -- makes it a little bit [indiscernible] , so maybe some of the extreme shorts are coming up a little bit. it has been more but extreme short positioning rather than at the british economy will get away with brexit and not have the apocalypse scenario that some jonathan: painted beforehand. it is interesting. very premature, but in the fx market, a new market emerges. fiscal sti