joining us from california is mohamed el-erian. th me in new york is robert tipp, head of global bonds and this week, lisa abramovitz joining us. mohammed, i want to start with you. are we witnessing of we could change where it is the fed leading the market and out the market leading the fed? mohamed: i think we are and we saw it earlier when the fed saw the implied -- was only 30%. to triple that probability, so by the time it hiked two days ago, the market reaction was favorable so i think we are seeing the fed transfer regimes, and it will be leading rather than following market. jonathan: most people would characterize it as a dovish hike perspective to expectations. do you disagree? robert: i do. when you look at the dots and how they progress, the participants of the meeting that wanted the under as of december 16, they had six of them that wanted the under and five that wanted the under. when you come to this meeting you have five that want the over and three that want the under, so in other words, the balance. the median's d

joining us from california is mohamed el-erian. he is the economic advisor at allianz.ith me in new york is robert tipp, head of global bonds and i am very pleased to say this week lisa abramovitz joining us. ,the gadfly columnist. mohamed, i want to start with you. are we witnessing a regime change where the fed leading the market and out the market leading the fed? mohamed: i think we are, and we saw it as early as two weeks ago when the fed implied the probability of a hike was only 30%. it was a very coordinated matter to triple net probability, so by the time it hiked two days ago, the market reaction was favorable. so yes so i think we are seeing , the fed's transition regimes, and it will be leading rather than following market. jonathan: robert, you are looking at what most people have characterized as a dovish hike you completely disagree. robert: i do. when you look at the dots and how they have progressed, the participants of the meeting that wanted the under as of december had six of them that wanted the under and five that wanted the under. when you come to

mohamed el-erian sticking with us, robert tipp, and lisa abramowicz.the markets this week, what a week it has been for sovereign debt. they will build through the week. negative five basis points, 1.3% on the two-year. the 10 year rallying by nine basis points. it will be 30 year coming in by six. coming up on this program, the final stretch. g-20 finance ministers meet in germany, and janet yellen taking the stage once again. this is bloomberg "real yield." ♪ ♪ jonathan: from new york city, i'm jonathan ferro. time for the final spread a -- where we take a quick look at what is coming up ov nexer the week. it will include another speech by the fed chair, and shinzo abe will be in germany as well g-20 finance ministers, where e.m. will likely be discussed. if you look at the bloomberg e.m. index, it shows the group has mostly performed better than expected with donald trump and the white house. i want to bring back our roundtable. mohamed, beginning with you, you talked about the experienced with the emerging markets. it was so easy to paint a pessimis

mohamed el-erian call it a goldilocks report. er on .he dow you are watching bloomberg. ♪ ♪ alix: back with this mohamed el-erian. business sentiment very high and warm weather. if we don't get something from the trump administration soon, pulling it givebacks from the strong numbers we have seen? mohamed: i'm not sure because it take a long time to respond. i would argue we have not yet seen sentiment translated into economic activity to the extent they can. what you get back is on the markets. the markets have priced in progress on the growth policy reforms. politics, buthe in terms of safety outliers you had warm weather. sustained jobs number month? 200,000 plus at this stage of the recovery is a very big number. if you ask me what is the long-term average, i would say 150,000. we are running hot right now in terms of job creation. no, we should not expect 200,000 to continue for a long time. aroundct that he down to 150,000. that would be normal in this late stage of the cycle. we created over 16 million jobs. anticipate thee

and here with us for the full hour is mohamed el erian. let's start with the market reaction. a reaction that was dramatic. futures down over 100 on the dow and we came back rapidly. mohamed: markets have been conditioned to buy. i was listening this morning to someone who used the phrase "cash trapped on the sidelines." you normally think of cash being trapped in the markets but now it is trapped on the sidelines. cash engages. david: in the longer term, what are the real risks now of the trump administration's policies getting badly off track? d.c. does two things really well -- nothing or overreact. and we are in a place right now where the markets are intensely focused on the shutdown date that kevin mentioned. if a 28 will be telling, not just because of the government shutdown, but also because it is ofng to be a telltale sign how this government is going to run for the next two years. and i think investors are going to be incredibly skeptical, regarding tax reform or infrastructure spending, or really anything else, if the republican party can't keep the lights on past a

mohammed el-erian joins bloomberg's real yield.ying to lead markets instead of reacting to them. is that a good thing for investors? 90 minutes into the trading day in the u.s., most stocks are sustained but julie, you have the latest movers. julie: largely in action on the macro level, kind of this drift we have seen. 106 sessions without at least a 1% pullback in the s&p 500. remember, it being friday, the friday in march when we get the quadruple witching. what this tends to cause is a bounce in volume, particularly since it has been suppressed with the winter storm in the northeast. above theht about 50% 20 day average for volume right now. you can follow it with the blue line or the graphs appear. either way you slice it, there is more of a surge in the volume at the open then there usually is, and you tend to get a surge in volume at the close. hourlked about amgen last after the results of a cholesterol drug study, shares are trading lower along with other companies developing cholesterol drugs. we have this health care slum

mohamed el-erian i am loving it. -- is noour next contestant average. 8 we have -- >> i am looking atng signals in the u.s. equity market. first, this white line. this is a survey of u.s. household councils in the u.s. equities. it is the highest since january 2000. it really means that the market, the last time that happened, obviously we went into a bear market two months later. people are thinking that is a bad sign but not so fast. look at the blue line. that is the growth for the s&p 500 which is also the highest that we have seen on record. it is important to note this. if you want to compare that to we have basically deadlines going into the yellow line. about a marketll collapsed you shouldn't be. #btvan see my chart at g 7245. vonnie: with a soft data or hard data? >> the white line is the soft data and the forecast could be hard. the biggest debates right now going on in the market and the economy is what is happening with inflation or ation orn or trumpfl whatever you want to call about it. it is important to decompose what is really going on. you might argue we are less op

paul: mohamed el-erian says the slow but steady recovery could be a risk of political leaders fail torol from monetary policy makers. transitiont if the is not made, central banks will become less effective at suppressing volatility and promoting growth. the equity rally spurred by president trump has faded and with its longest losing streak since 2011. >> politics will contaminate economics even more, than markets will have to ask themselves, does it make sense where valuations are given the economic and political background? the important thing is that the road we have been on the new normal is coming to an end because it is being eaten up by its own contradictions. wells fargo has reached a $110 million settlement with customers over its fake account scandal. the deal announced covers dozens of lawsuits across the u.s.. separately, a regulator has criticized the bank for an "an extensive and pervasive pattern of discriminatory and illegal business practices spanning years." turkey's government has criticized the arrest of the senior executive at one of its largest state-owned banks

plus mohamed el-erian will tell us what he believes is really behind the rally. >>> and othe

mohamed el-erian said the lack of meat in that speech, what are your key takeaways?raig: i think this was one of the most closely watched presidential addresses to congress, and that is because we heard a lot from donald trump on the campaign trail. we have not heard a lot as president, filling in details on key promises like repealing obamacare, his $1 trillion infrastructure plan, increased in defense spending. he talked about those. he gave us almost no details. a lot of folks in washington, democrats and republicans, are frustrated. shery: how frustrated will they be with the fact we are still wondering how he will pay for everything he has talked about? craig: what is the single biggest question out of tonight. we are talking about a $1 trillion plan for new roads and bridges, revealing obamacare, which would have cost associated with it. he talked about a $54 billion increase in the defense budget, another $30 billion on top of that for 2017. i don't know where this come from. i know the republicans who are the budget hawks don't know either. donald trump gave

also today, three all-stars, mohamed el-erian, dallas fed president, firichard fisher. hamed, goldilocks fed. i've heard people refer to what the fed did yesterday as that. and maybe that's why they think the stock market could continue to go higher. >> goldy lock fed, because most announcement, we got higher stocks and lower yields. that is why people are calling the goldilocks fed. and that's why i like to call it the beautiful normalization of rates. you can normalize rates without disrupting risk asset. having said that, scott, don't lose sight of two things. one, the market was technically positioned for higher migration in the dots. it didn't get that, especially for 2017 and '18, therefore had to cover. that was a technical reaction. second, don't lose sight that there is an ongoing transition in fed policy. this is a more confident fed. this is a fed that's going to lead markets rather than follow them. >> yeah, it's an interesting point. richard fisher, do you want to react to that? it's the same kind of point that gundlock made yesterday. the fed is back in con

mohamed el-erian is sticking with us.do not miss the bloomberg special coverage of the fed rate decision at 1:00 p.m. eastern. check out these two stocks moving ahead of the open. netflix raised to a whole from underperform -- hold from underperform. intel falling after downgraded shares for the first time in 10 years. moving to neutral from buy. this is bloomberg. ♪ alix: if the fed hikes, what do you do with corporate credit, particularly high yields? of maryland saying they underway to ideals for the first time since 2008. issuance sorting ou outflows. week aslion last outflows really ramped up. joining us now is lisa. still with us, mohamed el-erian. if we start to see the fed hike on a steeper path, what happens? lisa: this is the big question mark. points seen a number of of evidence that suggests a broader weakness in credit. retailers going bankrupt. below thatdip lo $50 mark. you see all of these signs of weakness in addition to the subprime auto situation. people are wondering, does this signal a broader weakeni

kevin o'leary, mohamed el erian, and former fed president richard fisher with us exclusively today.ur traders explain how they're changing their game plans a day after the fed move. and winners in energy, financials, health care and other sectors if president trump deregulates american industry as he promises. "the halftime report," top of the hour over at post 9. sara, see you in just a few. >> scott, thank you. >>> now we'll send it out to the cme group. rick santelli with the three musketeers post fed trading. rick? >> absolutely! thank you, sara. you know, we had a growth trade going on after the election. we had rates moving up. that didn't bug stocks. stocks moved up. dollar index. let's show a dollar index chart. let's start this chart from october, because basically, from october to december 28th, the dollar dollar index did something phenomenal. it went from 96 to 103.30. an amazing move. if you look at 2017, it spent all of five trading days in positive territory. the first five trading days of 2017. so we have lost a dollar index in that growth trade. granted, there are a

plus mohamed el-erian will tell us what he believes is really behind the rally. >>> and otheh, snap, shares of p falling. the company slapped with sell ratings. were are so many analysts so cold on the hottest ipo of the year? we'll explain. >>> first, white house press secretary sean spicer taking impromptu questions outside the white house moments ago, we go to eamon javers. >> reporter: that's right, scott, i had a chance just a few minutes ago to ask sean spicer here about a spears of tweets we get from president trump just in the past hour. i believe we have some of those tweets loaded up. the president here talking about exxonmobil, touting that company for a $20 billion investment initiative that the white house says will create thousands of jobs in the gulf coast region. interestingly, though, in the press release that exxon put out about this, you see there the president talking about jobs, jobs, jobs, thank you, exxonmobil, in the press release that exxonmobil put out about this, they say the series of investments began in 2013. so when sean spicer came out to take a few qu

you even heard the likes of mohamed el erian talk about manipulated rates. that have been managed and manipulated. these distort these cycles! now, let's go to the king here, the dow jones industrial average. this is what i'm talking about, you know, these vs, whether it's this way or this way. they're not supposed to happen in stocks, but sometimes they do. but the notion of why this recovery occurred, trying to measure it. a lot of times you will come back. so, whether it's the length of time or the continuity of these charts, by taking out certain segments, you can actually come up with better technicals. quickly, let's look at that chart from september of 2014. you see it on your screen right now for 10-year note rates. this is super critical. you've heard me talk about 2.60 to 2.62. the far left of that screen is september 17th, 2014. right now we're very close. these are huge levels for a variety of reasons i don't have time to go into, versus where the next move is. the next move's probably a test of 3.03, but how do you deal with this? tomorrow's you

coming up later today on "bloomberg daybreak: america's," a conversation with mohamed el-erian.ies, and regulation. coming up next, dutch voters heading to the polls in a general election that will provide the first gauge of the spread of populism in the core of europe. this is bloomberg. ♪ francine: "bloomberg surveillance." from london and new york. let's go to amsterdam. netherlands.he dutch voters are heading to the polls this morning in an election that will provide a key gauge of how far populism has reached into europe's core. .he contest polls?se are the >> there has been a shift. there has been a definite shift in the past 48 hours. slumpeddom party has really. now number five in the polls. there has been this stepping back from the populace to the right. will that translate at the ballots tonight and throughout the day because still front and center in the debate is immigration, integration of those immigrants, and thi is lam? the spat withe turkey, with statesmanship, with leadership, and is looking through the debates. tom: help me with when we will know.do we know t

coming up, a conversation with mohamed el-erian. look for that at 9:30 a.m. bloomberg. ♪ tom: good friday morning from london and new york. let's get to our bloomberg first word news. taylor: the eu plans to take a tough stance in brexit talks are discussions over commercial ties will not take place until there is progress in resolving issues like borders and the jets. the european council president signaled the process would not be easy. are about to which start, will be difficult, complex, and sometimes confrontational. imply: the guidelines it that the you cable get a shot at a tariff-free trade deal only if there is quick resolution of the though the eu wants them to pay. korean president park has been jailed. she has been accused of giving tens of millions of dollars to an organization run by a confidant in exchange for government favor. a day after announcing he will meet with chinese president xi jinping next week, president has blamed china for trade deficits. shakeup inrica, a the government. president zuma has fired the finance minister and other ca

mohamed el-erian will be joining us.♪ ♪ bank is: deutsche falling today by as much as 6.5%. now down by 6.14. the ceo does an about-face and turns of his own turnaround plan. he spoke with bloomberg earlier about what would happen if you put a strategy in place a year ago. >> i think a year ago it would've been much more difficult for us. i personally feel much more comfortable sitting in the seat i sit in this time, this year, then i would have last year. jonathan: joining us with more is michael more. it's the fourth capital infusion since 2010. why is it this the end of it? michael: they do benefit from the stock having almost doubled over the last six months. they are able to raise an amount they think satisfies the capital question without going back to shareholders to get further approval. sale in theshare asset management ipo the get about 10 billion euros. that gets them above their target and gives them a little wiggle room if there is more cost to come. jonathan: if i distilled the conversations on this subject

i caught up with mohamed el-erian and we talked about the composition. are taurus and they are cautious. d.c. tourists coming into the -- do you see tourists coming into em em investment? amer: i would not call them taurus. i would say they are nonconventional investors. jonathan: that is my wood. -- that is my word. amer: the numbers are very large. you could think of it as a tactical trade that could be quite dangerous. you could think of it as a structural presence into an asset class they have been out of four years now. i tend to favor the latter. have beene crossover under-invested in emerging markets since 2013 in this is their way of catching up. is there a short-term risk, of course there is. alix: finish your thought. amer: structurally, i am confident with their presence. jonathan: talk about playing catchup, the idea is money will come back in, and every person we have had at the table says i want to buy europe. how do you do venture a -- how do you differentiate? federico: a lot of people want to buy europe, but how do you buy -- we have art

jonathan: mohamed el-erian was on the program yesterday and he said the three things important our content, timeline, and approach. how much longer to be have to wait? >> my perspective on the market side of it, i was looking toward health care, tax, and trade. on health care, there is still forward on aca reform. the longer they take on aca, the less time they have on tax reform. i put out a piece of an eye can see health care now getting pushback they were hoping to get it done in the first quarter of the year. it more likely looks like early next year. upgrading of america their end of your price target for s&p to 2450 based on sentiment and technicals. meaning of, do the markets care about the specifics shawn is looking for? troy: clearly markets care, but what they are basically alluding to is that we are going to take it on faith that we are going to get progrowth reforms that lead to better revenue and earnings. because of sentiment and technicals, we will get further multiple expansion, which is still a question. we are fairly high multiples, which you know. they are discounted fut

on friday it's all about the payroll with mohamed el-erian, and danny blanchflower, expert on the laborrtmouth university. the market opening is 19 minutes away. the weekend and good for the bulls once again. futures down 1/10 of 1% of the s&p. you are watching bloomberg tv. ♪ ♪ alix: this is bloomberg daybreak. the countdown begins to 1:00 p.m. where janet yellen will speak. will she endorse a march rate hike? a look at the bloomberg financial conditions index. the circle is where this condition index was from the fed hack in december. you can see the spike in just a few weeks. toldman sachs says tha is adding as much a 70 basis points. keith and paul are with us. do you change your portfolio when you hear retail coming in? keith: not yet. the momentum is still very positive. the internals look good. the problem we have is valuation, which is a longer-term concern. we can see the markets continue their plot higher over the next few weeks. we are running into some serious headwinds. valuations and higher interest rates among those right now. alix: there was also the potential for the ma