chair powell: 3.7%. ocasio cortez: what we have previously thought of as far we are currently .xpanding 3.7% unemployment has fallen three full points since 2014. inflation is no higher today than it was five years ago. given these facts, do you think it is possible that the fed's estimates of the lowest sustainable and limit rate may have been too high? chair powell: absolutely. rep. ocasio cortez: so, we overshot in what our long-run unemployment rate is. chair powell: i think we have it is lower than we thought. it is substantially lower than we thought. rep. ocasio-cortez: i have been seeing lately that economists are increasingly worried that the idea of a phillips curve, that links unemployment and inflation is no longer describing what is happening in today's economy. have you been considering that? what are your thoughts? chair powell: we spent a great deal of time on that. the connection between black and the economy with a level of unemployment in the economy, it has gotten weaker to the point

chair powell: neither. we will always do it to the best of our ability and based on objective analysis. rep. mchenry: we have a significant change to libor policy. i wrote to vice chair corals along those lines. there's been major progress made in terms of the swaps and derivatives contracts. i remain concerned about legacy retail contracts as well. has the fed undertaken analysis along those lines about legacy retail contracts and the use of libor? chair powell: indeed we have. that is a very important art of project going forward. we've reached out to revisited of's of users -- two representatives of users of libor for some time now to deal with that. as you know, a significant quantity of libor contracts are in fact mortgages and the like. that is a really important area. we did the derivatives things first, but we are working hard on the retail side now. rep. mchenry: is there any estimate on the number of loans that have to be renegotiated because of this policy change? chair powell: i don't have a num

chair powell: yes. require this, we do financial institutions that we supervise to have a plan and understanding to deal with severe weather, particularly those that are in areas exposed to increased risk of severe weather. chair powell: does severe -- is severe weather increasing due to climate change? chair powell: i believe it is, yes. >> has the fed changed its approach in assessing severe weather risk over the last 10 or 20 years? chair powell: we had a policy in place. there has been quite a lot of research done at the fed around severe weather and its effect on the economy. we do incorporate that into our supervision of these institutions. ofting edge understanding the effect of severe weather events on the economy. we do incorporate that into our supervision. >> has the process change? -- process changed? chair powell: i would have to go back and look. is severeson i ask weather, generally speaking over the last 10 or 20 years has been that cannotomething be helped into a certain extent it canno

chairman powell: yes. there's also -- it's good to save, but at the same time, if there is a shock to confidence, you can see people pulling back from their regular consumption patterns, and that will show up in the demand and the economy will weaken. >> as far as the decision-making on the part of fed, are you relying on conventional economic data or being swayed by jaw boning of the president? chairman powell: >> we see the economy as being in a good place, and we're committed to using our tools to keep it there. as we've discussed, the overall economy is performing reasonably well, but we see what we have called cross currents, principally trade developments and concerns over global growth. many fmoc participants at the last meeting saw those as weighing on the outlook and calling for possibly for accommodating policy. >> thank you very much. chairman powell, despite data proving that diverse companies perform more successfully, we still find the financial services industry is largely white and male at

i don't chair powell: --chair powell: i don't. i don't think it would be appropriate for me to comment on those negotiations. rep. kustoff: in the next several weeks, we will be voting on a proposal to raise the minimum wage to $15 an hour. there was a cbo report that came out in the last day or so that in theed that a raise minimal wage to $15 an hour could cut -- should cut 1.3 million jobs up to 3.7 million jobs. what with the effect to the economy if congress were to pass a minimum wage bill raising the minimum wage to $15 an hour? chair powell: the question of the minimum wage is really one for you. i think there are a range of studies that have different outcomes, but like the cbo study, but they tend to show is that a number of people get higher wages, and a number of people lose their jobs. those numbers will change depending on what assumptions you make. it really is something that there is no consensus among economists. economists are all over the place on this. is really a question for you to look at a range of studies

powell. the first thing i want to say to you is be strong, be courageous. it is important for this nation and the economy of the world that the fed, federal reserve, remain strongly independent. the other thing i want to say to you is have no fear. the president can't fire you. we in congress, both democrats and republicans, have your back. i want to go to what i think it is -- and it has been mentioned a couple of times -- this libra business is really disturbing. it is a serious problem. let me tell you why. first of all, i think we all know libra is the london .nterbank offered rate very critical. it has and is the standard for the base rate for hundreds of trillions of dollars, both overnight and term loans, debt revenue. it is the standard that has been used internationally and extensively in the united states , affecting individuals, small businesses, large corporations. we've got a big issue here, but of pervasive manipulation now, it is apparent that libra was going to leave, be remov

chair powell: you are right. there are a range of views on the committee, but the community is complete the unified on our dedication -- completely unified on our dedication to making the best policy decisions that we make. people have a responsibility to do their best thinking and present that thinking, and i would not have any other way. we will be monitoring the factors. that is the roadmap we will follow going forward. we will be data dependent. what we need to do, what we believe we need to do to support economic expansion. john, american banker. monthsbeen about 18 since the fed issued its enforcement action against wells fargo. couldwondering if you characterize the progress of the bank has made towards the shortcomings it had towards its risk management processes, and also curious whether their lack of a permanent ceo has hampered progress in your eyes. asir powell: the problems -- at wellsaround fargo around risk management and the way they dealt with the consumer were actually pretty deep. i think the c

chair powell: not at all. it is critical the public understand that we are always going to do our work objectively based on data with transparency and we will do what we think is right for the u.s. economy. that is what we will do and that is what we will always do. with data, you are prepared to raise rates if necessary? chair powell: absolutely. we will do what we think is right. >> the final quick question. the federal reserve banks are subject to several levels of , and the review reserve bank financial statements are reported by independent accountants and retained by the board of governors. do you believe it is important for the board of governors to know whether the board has been -- it is important -- chair powell: it is important and we demand all relevant information on that question, including any kind of question that has been raised. we get that information before we make a hiring decision. >> thank you for your service. >> senator brown would like to ask another couple questions and then we will

no wonder powell -- thank you, kayla, no wonder powell puts it in context here. >> sure.s is so important if you talk to a u.p.s. or fedex, you got to get this there is good agents the number of cars coming from mexico, and this is something that if you're going to mix sticking point, a democrat, you argue that but this is good for -- this is a -- it is a good thing for everybody. it has got to get passed if someone relates it to the wall, there is always -- it is more complicated than just good for america. >> yeah. jim, i wanted to come back to you. we had ginni rometty and you had her and jim whitehurst yesterday and on "mad money. anything that we learned further from our conversation to then your conversation with them separately on "mad"? >> they're talking about being collaborative. this would sound like with most companies, why not be collaborative? but ibm historically is thought, now, it is true, it is thought to be not collaborative, you got jim whitehurst saying we're going to work with everybody, ecumenical, that would be fabulous for them. i believe in this.

chair powell: i will. should start by saying we play no world in setting trade policy, and no one -- no role in setting trade policy, and no one should construe -- sen. shelby: but it plays a role, yes? chair powell: correct, but what we get from our business contacts, and i imagine this is fairly the same as what you are hearing, if you are a manufacturing company in the united states of any size, you've probably got a supply chain that goes across international lines. that is a really important part of your business. so the trade negotiations that have been going on have injected uncertainty for those businesses into their supply chains. many of them have moved their supply chains. some moved them to mexico and found that exit might be the target of tariffs. others are considering what to do. at a minimum, it is a distraction from going out there and rolling out new products and that sort of thing. so it shows up a lot in the beige book, just overall concerns, and i think it is weighing on the outlook. m

you don't want to fight jay powell, do you?ejra: it seems like jay powell doesn't want to fight the markets. taking a look at asian equities, we are seeing gains there. aboveci asian index is 3000, seeing the dollar weaker for a second day. pimco talking about rolling over the dollar but it depends on even cycle. the 10 year yield down to basis points. a precipitous drop in the two year yield. of repricing in the bond markets around those cuts. manus: a new record, we've cracked it above 3000. what does it take to maintain that momentum? the by everything rally, is that going to be challenged? is something more ominous on the global horizon, according to jay powell? they are saying the beneficiary could be the yen. you see the powell testimony as being slightly worrying. deutsche bank, it doesn't end, does it? nejra: exactly. more bad news for deutsche bank. we've learned the u.s. debt -- justice department investigating the lender as part of an expanded probe. joining us is sophie cameroon. great to have you with us. -- sophie

waiting for jerome powell to speak later. u.s. 10 year, waiting for powell.arket is convinced about july. questions remained about the rest of the year but yields ticking higher, 2.8%, supportive to the dollar. the pound, down .1% or so. johnson andm boris jeremy hunt, both vying to lead the party. boris johnson has been doubling down on his brexit by the end of october assertions. parliament has made moves in the background block any attempt at no deal. wti crude up a little on data from the supply story in the u.s. it does remain a day where we could be in a holding pattern, waiting for jerome powell to speak later and he just doesn't speak today, but tomorrow as well. we will hear a lot from fed speakers. dani burger will take us to how many we will hear from. that is part of the narrative of the markets this week. inome powell today washington and tomorrow, so we will focus on that. what will he have to say about confirming market expectations for july and about longer-term or medium-term into the rest of this year and early next? that is what we are talk

we look ahead to jay powell. the two-year back above 190, jumped 22 basis points since the lows in june. a touch of curve steepening. what's that going to look like after powell? futures flat. we saw u.s. markets not move a lot yesterday. the next direction could come from jay powell in his testimony this week. the peso took a beating yesterday. we broke through 19. weakness yesterday pushed the bloomberg dollar index up above the 55 day moving average. the finance minister quit, but was replaced. how much more risk is out there for the peso? manus: to south korea now. this is one of the big issues. warnednt moon jae-in has the country's top businesses and leaders they may be in for an extended trade battle with japan. tokyo ruled out lifting export controls on key tech components. let's get an update now. we have our bloomberg reporter standing by. good to see you this morning. >> the president has invited these company executives to warn them, as you mentioned, that this trade spat with japan will prolong becau

>> i think investors are nervous about what powell is going to say.he fixed income market is clearly very long, long duration, long bonds and there is a fear that if he's not as forthcoming as the market expects him to be, the bonds will back up that said, it looks like today's move was actually a european move german yields are backed up a bit more than u.s. yields and the move started when the european market opened u.s. yields weren't doing much before so i suspect it's two issues both related to the market being long but the immediate move today not necessarily driven by powell here. >> let's bring it back to the u.s. right now and obviously the market pricing has shifted over the last couple of days and since nfp. the market is pricing in about 2 1/2 rate cuts by the end of the year according to your assessment, how much of that is on back of the actual weakness in the economy versus just inflation under shooting the target? >> look, i think the market is underestimating how much pressure the fed is under because they're missing their targets and

chair powell: absolutely.hink it's learned -- i think we've learned that it is substantially lower than we thought. meyer we welcome michelle of bank of america merrill lynch. jay powell being frank, saying it is absolutely different that we thought. what has gone wrong? michelle: there's lots of theories as to why the phillips curve has flattened, but i think the main reason people have accepted this flattening is because you haven't seen fast enough wage growth. an unemployment rate below 4% for some time, you would think that wages would be increasing at a faster clip, and they are just not. they are edging higher slightly. the conclusion is either you , ort have full employment you just have a really flat phillips curve. alix: so it is just a full easy elsey reaction in markets. do you buy into it? does it continue? guest: we think there's a counterfactual around the phillips curve. you've got the inflation element, but you've also got corporate uncertainty that we think is driving market expectations to e

some -- i have been impressed by powell. i think he is warning there are signs the economic outlook is deteriorating rapidly. that is slightly worrying for the by everything trade. -- buy everything trade. he has lowered yields everywhere. reached their own conclusions, and it seems like the fed is worried, i am worried, but not many market participants are worried yet. anna: not worried enough to stop buying. what does this mean for the dollar? the simple answer is the dollar weakens. we did see some people pointing there is a big interest rate differential between the fed and elsewhere. do not expect the dollar to fall to quickly. -- too quickly. mark: my view has not changed from last night. or dollar peaked out a month two ago, and the next move will be lower. easy affair,e an it will be a jacket move up and down. the bigger move will be to weakness. the yields on the dollar are attractive, but it is the direction of change that is moving faster than other countries, because they have nowhere lower to go. over the next y

just to be clear, president trump hired powell. he didn't hernt powell. powell is his guy.ngry at powell's decision over time to raise interest rates. something trump thinks could hurt his economic record. but that's not cause to fire the chief of the most powerful and important central bank on earth, because it's independent. outfront now, peter nofr o assist to the president direct of the office and trade and manufacturing policy. great to have you with you. i appreciate having you back, peter. >> great to be here. >> what did you make of what jerome powell had to are leave. if president trump asked him to leave and he wouldn't do that. >> what i heard today from jerome powell that was meaningful was that he was going to lower interest rates this month. let me make the case as to why we in the white house are so disturbed by what powell has done. basically, jay powell when he auditioned for that job he promised the president that he would be dovish on interest rates. and starting in march of 2018 he did four interest rate hikes of 100 basis points. now if you use the fed

he looks like a genius because jerjerome powell made him look , powell made mistake after mistake, todayght thing and still screws it up, that is a man with a problem. what -- what is the fed going to do? you can't -- the president talks about firing the man. it looks like the graceful thing for him to do would be to resign? >> right thing might be for fed to listen to the market. not only did stocks sell-off but we had a drop 10-year treasury yield, even short-term treasury yeleyield moved lower. >> you know this -- there is by the way, some in the aghast business press think that president should not be -- they don't understand the basic principles of free enterprise market. >> you have to pay attention too as many variables as possible. you have to look -- listen to prices, look at the labor market and business sales, which by the way that slowed significantly over past year. a year ago they were growing 6%, now growth 2%. that by itself, is strong reason for several low rate cuts. >> as you say, looking at treasuries alone that is a good guide. you know, and by the way, if i may just

consensus around jay powell?ichmond fed president speaking to michael reporters, theo fed does not need to step on the gas. however, when he looked at what jay powell said, he did not change the message for the june meeting. let's listen -- said the same thing yesterday he has said for the last month and we said in our last memo. we do not have forward guidance anymore the memo. we are watching carefully what is happening in the data. we are looking very much on upside risk and downside risk. at this point they are tilted to the downside which is why we are looking at it. another: let's bring in fed president. he played down the need for a rate hike as well. he said in fact that -- here it is. from an employment perspective, the economy performs in a positive way and the numbers are not as weak as some suspect. the aggregate numbers look pretty good. remember the consumer price index coming in stronger than the month of june, up 0.3%. that came up before powell even spoke. that is the biggest gain since january 2

here you see chairman powell attempting to coalesce around a rationale, okay? the rationale is what the fed has been circling around, this idea of trade tensions, this idea of low global dizzy mand, and an idea that inflation is low. this is actually significant on the inflation front. remember, it wasn't only just -- several press conferences ago, where jay powell was saying inflay inflations transient. we have a co's lessens around from guidance. the guidance is not particularly helpful we have a new statement in light of the implications of global developments for the economic outlook are we talking terafor, trade tensions weak manufacturing not a lot of speaks fitities >> first, i think that's where jay led us before. he didn't lead es very well on that he needed to hear move about the inflation undershoot he punted on that question he could have done a much better job of saying we've missed inflation for so long by so much i think people would have gotten the gist of what he was doing. i think it's -- this is not the starred of a recession maybe we went to

here is chairman powell. >>> it's partners.eral reserve has played a significant role in overseeing data protection and privacy across the u.s. financial system, including payments cryptocurrency papts, particularly those based on blockchain, technology, pose a number of new challenges for data protection and privacy and the effective oversight of those issues i'm sure that the members of the federal reserve have been looking at this and i would be interested in what your understandi understanding at this point is of how the federal reserve's role for data protection and privacy with respect to traditional financial services can be applied to libra and calibra. >> thank you i would start by saying that we do support responsible private sector innovation in the financial system as long as that's carried out in a way that addresses the associated risks and preserves safety and soundness. so the project sponsors hold out the possibility of public benefits including greater access to the financial system for some, but i think we ag

——jerome —— jerome powell. ——jerome powell. but —— jerome powell. but he ——jerome powell.. but he may not be able to steer clear of washington politics. wall street will listen closely to see if the head of the us central bank offers any clarity on interest rates. jerome powell and his committee meet at the end of the month, deciding whether or not to cut interest rates. after a strong junejobs report cut interest rates. after a strong june jobs report that prospect is dimming by the day. a rate cut is typically used to stimulate a faltering economy. and equally important message may have little to do with monetary policy and everything to do with it to make‘s commitment to keeping the reserve as an independent body in the face of complaints and threats from the white house. as recently as sunday, the president has asserted that the dowjones industrial average would be 10,000 points higher if the fed cut rates while on tuesday, white house economic adviser larry kudlow said thatjerome house economic adviser larry kudlow said that jerome powell's house economic adviser larr

is still there to mr powell show how tough he is today or did he show weakness. i think he showed basically we have this i think yes he says something he says about independence everybody says that but the bottom line is when the president tried to jawbone him and and insult him into cutting rates it didn't work when the president then went on a tear against china and all the other interferences in global markets that this administration has undertaken causing on certainty and the pulling back of investments and all of that he actually brought the world economy into a worse situation in order to use that to get mr powell to lower rates or at least to give him the excuse it's a stunning example not so much of interference in the fed all presidents do a little more or less of that what is stunning is the degree to which the republicans and mr truong will challenge undermine threaten the whole world economy to get their little way in this next election which for them is make or break that's the extraordinary theater that's unfolding in front of us and peter same que

more on jay powell's testimony. from new york, this is bloomberg. ♪ from bloomberg world headquarters to new york. taylor: i'mbostick taylor riggs. romaine: stocks are up, treasuries are down. joe: the question is, "what'd you miss?" gearse: the fed chairman up to face lawmakers on capitol hill. shares of dialysis providers sink today as president trump takes aim at prices in the kidney-care market. and we will speak to one of the candidates running for president, representative tim o'ryan of ohio. taylor: fed chair powell is set to appear before the house banking committee tomorrow and onto the senate on thursday. powell will likely mirror language from the fomc minutes last month, saying it will act as appropriate. i want to welcome our senior reporter for economics. what is the one key piece of information you would like to hear from powell tomorrow? >> everybody will be focused on the timing of the potential rate cuts. it seems it is not whether they win do it -- whether they will do it, but when and how much. h

powell is in a no-win situation. the president is very tactful and has done it for the last two years. the fed is set up to be the fall guys and gals and if the market goes lower here is your villain, folks. i think they were in a no-win situation. he did what he needed to do. thousand do you trade it i don't know if you look and we can talk about it, but the last couple of big names, amazon reported at the all-time highs, sold off facebook, the same thing we will see what happens with apple but it seems to be setting up for the same thing with facebook and amazon. i don't know maybe the market has finally gotten too far ahead of itself so maybe we're in for the 5% pull back tony has been talking about. >> are things different from what we thought powell would say? i mean 25 basis points, ending the balance sheet run-off earlier by two months, and then sort of -- you know what's next. >> we're going to grade the fed president later on in the show that will be a lot of fun. as guy is critical of the president's statem

jay powell signals a cut is coming as concerns. rising tensions. .he british navy intervenes deutsche bank in the crosshairs. u.s. investigators probe and involvement with malaysia. welcome to "bloomberg surveillance." good morning. good afternoon if you are watching in asia. i am francine lacqua. these are your markets. a cheer across the market for a dovish tilt for central banks. we heard from jay powell. we will hear from him again today. the euro-dollar, 1.1278. there is a lot going on, not only about trade. official taxes that france will vote on. there is a mood on what happened to euro depending on what we get from the ecb minutes that will be released after midday. we will watch for that and any movement on currency. coming up, we speak with the sao paulo governor, he is joao doria . plus we will speak to sheriff brown about u.s. politics. let's get to the work first word news. >> deutsche bank is now being probed u.s. justice department as an expanded investigation. the u.s. is reportedly taking a closer look at a former

powell was talking about. that mid-cycle correction kind of adjustment really led to the expectation this is not going to be a long series of fed cuts and i think that's why the market is very disappointed. liz: why do we see on the screen that september, you have fed funds futures betting on a 70% to 74% chance of yet another rate cut? is that, andy, the one you feel will be the last one until the end of 2019 and perhaps just as importantly, there was something that could be interpreted as more stimulus and that is that the fed decided that it would halt its balance sheet runoff, its unwind, two months early? >> liz, let's put it in bullish and bearish. i'm absolutely, the end of quantitative tightening is bullish. you know, the fact that he was waffling as to whether it's one cut or two is bearish. the fact that there were two dissenters who clearly don't want any kind of rate cut is certainly bearish. we are seeing it in the yield curve, seeing it in tens. we think ten-years will break through this 2.01 lev

he's a big powell supporter.>>> coming up we'll reveal the runner-ups to the top states for business places five through two. this is like some of the beauty pageants where i get confused. runner-up is that second, i don't know stay tuned "squawk box" on cnbc will be right back >>> the fed front and center as jay powell heads to capitol hill we'll hear from the ranking member of the house finance services committee and what you need to be watching for. >>> moguls gathering and we'll discuss the battle for your living room. >>> and is economic growth bridging the wealth gap? second hour of "squawk box" begins right now ♪ >> live from the beating part of business, new york, this is "squawk box. >> good morning. welcome back to "squawk box" here on cnbc i'm melissa lee with joe kernen and mike santoli taking a check on the u.s. equities futures, we're indicated to open at the dow is looking to lose 66 and the s&p 500 down by nine points and the nasdaq losing this morning and the testimony will be released this morni

you can see the japanese nikkei higher and the south korean kospi up all eyes on chairman powell.y looked what he had to say green arrows across the board and the italian index holding up the best but again green all around europe. now you're looking live at new orleans are a major tropical storm is taking aim. forecasters say it could make land fall as a hurricane by this weekend. oil prices are higher today. they were higher yesterday by about 4 and a half%. near $61 a barrel. we're going to continue to monitor the storm and bring you any new developments as they come they're already taking precautions in the gulf of mexico switching gears, jay powell is testifying before the senate banking committee this time. yesterday he went before the house and signalled a rate hike could be coming at the end of the month. let's bring in chief market strategist at ameritrade powell had a bit more off a dovish tone than i think some were expecting pricing in 25. and now there's 33%er chance we could go 50 basis points where are you right now? what did jay powell say that may be informing the

is what chairman powell actually says. let's take a look at what the markets are anticipating the fed will do. ofe than one cut by january 2020, two by january 2021. alix: i think it's a little --vincent: i think it's a little ambitious. i think they are looking to hit a homerun and make a name for themselves. 25 basis points is likely. not so much because the economy needs it per se, but i think it maybeake act of what was a policy error in january when a hike wasn't necessary. there's also a lot of positive news coming out of the trade talks. my sources in asia tell me that is totally not correct, and i think the president has probably spoken in the ear of jay powell. the reality is the talks are struggling a bit, and a 25 basis point rate cut right now would be a pretty decent insurance move. alix: it raises the question, would it be an insurance cut or the start of an easing cycle? i feel like that is the nuance we are hoping to get today. gina: it is, and i think our hopes are little bit inflated. i don't know that we

there has been no bigger critic of jay powell than president trump. the president said today this was not a direct result of caving to the president's desires. >> this action is designed to insure against downside risks overglobal trade tensions, offset the negative effect that those factors are already having, promote faster return of inflation at 2%. that is what we're doing. that is why we're doing. we never take into account political considerations. there is no place in our discussions for that. we don't conduct monetary policy in order to prove our independence. reporter: we didn't get much clarity how a trade deal with china might come b the talks in shanghai wrapped up with the next meeting in december, the china will commit to an to an ago buy. there is no tweet from president keep hitting refresh. kristina: you were too busy refreshing. i would thank him. jackie deangelis at the new york stock exchange. investors were not impressed or didn't hear what they wanted to hear from jay powell? >> kristina, that is right. we were up most of the ses

jay powell is not moved by inflation data.s confidence is the biggest concern. >> the first quarter was fine, but the income -- the indicators for the second quarter are less strong. i do not see people cutting back existing plans,, but they are not leaning forward. nejra: president trump claims china has not increased purchases of american products like promised. south korea demands a probe into japan's claim of illegal exports. trump slammed facebook over a cryptocurrency. and expanded alliance today. just past 7:00 a.m.. welcome to "bloomberg daybreak: europe." we have had five days of weakness and european equities, it looks like we can and on a high. dax and cac and u.s. futures higher. s&p 500 hit a record high, above 3000, but it did not stay there. it closes just below it. u.s. equities did take a tiny bit of a hit when we got the line from president trump complaining that china has not been buying u.s. farm products. trade tensions are still weighing on the markets. looking at bonds, we have a reaction to the u.s. com

fed chair jay powell testimony pointing to a rate cut as soon as july. treasuriry yields are lower in response, so is the dollar small caps and transports are weak in the session. joining us is josh brown welcome back. >> good to be here >> are you also in celebration mode after jay powell? >> i'm also in celebration mode. >> we got all but a promise of a rate cut i think in july. >> they're going to do it. i said earlier, he foamed the runway for what ithink the market knew he was going to do the thing is, i don't think it's necessary, but i also don't think it's harmful a 25 basis point rate cut most likely, the best example of something like this, that i can think of from recent history is 1995 you had a new all-time high in the stock market the day they did the cut, but it was a single cut. and a lot of the reason for that, they had done a surprise rate hike in 1994, which kind of crushed the bond market, people were shocked i think what the 1995 single cut was about was taking some of the pressure off from that, maybe also like a mea culpa, we didn'

powell had a good night's sleep. be careful with the word choices. >> he will he'll do well. he has been proven to be articulate extremely adroit at this type of maneuver. >> thank you very much for breaking this down for us. >>> coming up, getting a dial tone you know, the one company that's sending all of those annoying robo calls straight to voicemail. let's hope. >>> plus, music superstar lady gaga making a big bet on the billion dollar beauty industry we'll tell you who she's teaming up when "worldwide exchange" returns. e is what teamwork is all about. you can't do everything yourself. you need someone to guide you and help you make those tough decisions, that's morgan stanley. they're industry leaders, but the most important thing is they want to do it the right way. i'm really excited to be part of the morgan stanley team. i'm justin rose. we are morgan stanley. did you know that feeling sluggish or weighed down could be signs that your digestive system isn't working at its best? taking metamucil every day ca

. >>> and investors on edge as wall street awaits powell's capitol hill testimony we'll take you live to d.washin d.c. and a big phrma win but will washington fight back. it is 5:00 a.m. on this tuesday, july 9 and "worldwide exchange" begins right now ♪ good morning and welcome to "worldwide exchange. i'm dominic chu. this morning futures are pointing to what looks like a lower open on wall street following back to back losses for all of the major indices.russell 2000 coming off its worst day in two weeks now down more than 10% for those small caps from its recent 52 week high. and as you can see here, dow opened down about 118 points if the future losses carried through into the opening bell for regular 2r5idin trading. nasdaq off by about 55 bond market still a focus. around 2.07% the two year treasury note yield covering right around 1.91% as well let's thousanow go worldwide in the asian trade, nikkei a bit of a standout there up by with 0.01%. and the hang seng and shanghai composite are off. and in the european trade, slightly negative sentiment carrying through but not for the

the topic of was discussion for chairman powell's testimony.hat was not the only thing lawmakers pressed the chairman on. members of the senate banking committee pushed powell on the phillips curve and whether the trade-off between unemployment and inflation held true for the u.s. economy. >> the neutral interest rate is lower than what we had thought. we are learning the natural rate of unemployment is lower than we thought. monetary policy has not been as accommodating as we thought. we are learning all of those things. at the end of the day, there has to be a connection. low unemployment will drive wages up. higher wages will drive inflation. we have not reached that point. the connection between the two is quite small. sheri: joining us now is senior u.s. economist for bloomberg economics and brett ryan, senior u.s. economist for deutsche bank. welcome to the show. everything that chairman powell said seemed to support a rate cut for july. let me ask you about the rate going forward. basishe bank expects 75 point cut this year. limber econo

, we're on powell's side. that's significant >> here we are with the markets now above those key benchmarks, talking about all-time highs and the expectations for policy are pretty high. can you stay exposed to equities can you stay exposed to bonds at these levels what do you do >> we certainly can stay exposed to equities. you have to. they've gone from being data dependent on determined to take back at least the december rate hike and i think the epiphany that jay powell is trying to give us here is that, oh, by the way, here's what we've gotten wrong and have to adjust the unemployment rate at full employment that's gone from 5% down to, we'll fill in the blank when we figure out what that unemployment rate looks like and the neutral rate of the fed funds target rate has to be lower as well. so not knowing what the neutral rate is on unemployment and on the fed funds rate, we're influx what jay powell is battling against right now is more the ill effects of trade policy and using monetary policy to lean ag

he is saying the jay powell has let us down. the market wanted lengthy rate cutting cycle and of course that was something that jay powell was saying we wouldn't be getting anytime soon. >> we had a sense this is not going to be trump. what the market wants to see is that jay powell is acting independently. and they are acting based on the data. --he could continue to the in between the two references europe. looking at europe's economy, this trump really want that growth and unemployment? we will have to question. it's time for smart charts. >> joining me to talk about the s&p is walter zimmerman. thank you for joining us. you have a dramatic part that matches up to and s&p chart. perhaps some are calling it less dovish others are calling it slightly hawkish. it may be in impetus for this chart to work. the s&p itself is still confirmed to go slightly higher. that's the s&p 100. on average more precise chart patterns. this one is no exception. each of these turns from here to here, textbook perfect. close tore extremely this pi

maria: first day july 11th, federal jerome jay powell drawing markets higher, powell signaled rate caughtwell spoke only nasdaq managed to end the day at record high. escalating tensions with iran, iranian gun boats tried to seize a british oil tanker, british warship intervened. the very latest, severe storms hitting the gulf of mexico, state of emergency declared in louisiana as royal evacuated in new orleans with massive flooding, bitcoin plunging this morning after fed jay powell expresses concern about facebook's new offering, mornings with maria begins right now. ♪ ♪ >> big program this morning, coming up philadelphia federal reserve president in studio this morning

investors gearing up for chairman powell tomorrow the s&p 500 on pace for a third straight day of declines the nasdaq trying to snap a two-day losing streak. industrials the worst performing sector following a downgrade of 3m, and for more on all of this and what is sending the dow lower today, let's go to bob pisani at the new york stock exchange >> an important thing, scotty, here is we're down three days in a row, and this is not so much i would call searching for direction as i would say that we really need to figure out where the market is going. we're waiting for news, essentially here we're waiting to see if the fed really decides they needed to cut rates aggressively, we really need to see if there is any progress on trade. and we really need to find out if the earnings estimates are too high going into the second half of the year take a look at some stocks moving here. the good news, the low print was at the open. i see semi-conductors like advanced mike row are doing well, all the metals have had a terrible year. they have no traction at all amazon has a new breakout that's a new

day one and powell day two. he affirmed the market's view that the fed will cut rates in july and maybe gave us a hint about the need for the federal reserve to be aggressive there was one bit of sound that was not the most exciting, but maybe it gives us how much in july and what comes next here's what he said when asking about it >> you don't want to get behind the curve and let inflation and you get into this unhealthy dynamic where lower inflation is in lower interest rates that means less room for the central bank to react and that's a self reinforcing thing. we see it in europe. >> this idea about not getting behind the curve speaks of a potentially more aggressive federal reserve when it comes to cutting interest rates and the market priced in for three rate cut this is year and about a 20% chance of a 50 in july that's the minority point of view and it was about two or three before they spoke yesterday. >> they don't necessarily dissipate and those things stay with you for a while more accommodative and

powell has asked about this.eferences to things like strong data and how much the risks materialize. don't think the cut was needed. the only thing they think it will do is satiate the market's desire for more rate cuts and give donald trump more things to read about. jim bullard speaking today. they should cut in july. he will have the outcomes of his numbers, but he thinks an insurance cut is needed to make sure that the risks materialize. there is a buffer already. there is an insurance thing you don't want to use. that's his logic for the fed moving. paul: global economics and policy editor, kathleen hays. thank you very much. what does the likely fed cut and global money mean for investors? ands get over to hong kong fidelity international investment director catherine young. to cut almost said no rates by 25 basis points in july. if we look at the reaction, korea seems to be its own thing, here in australia and on the nikkei, the reaction seems to be shrugging of the shoulders. was this priced in? >> a lot

we've got to stop thinking powell is looking at earnings and start thinking about powell looking at these cut numbers and get back they're so out of whack. we changed the inverted yield curve back to where it should be our rates are way too high next thing you know, we have a real bull market going i think that's going to happen, a new leg to the bull. >> we got the china truce, and the entire sell side street said be careful because this is one and done and there's not going to be anymore positive developments now that we got that and the market -- i said, i bet you the market keeps going because everybody is at 2950 on the s&p. here we are. >> oh, look, morgan stanley, firm i love, earlier this week said, look, put money where your mouth is, sell stocks. i want to put money where my mouth is, buy stocks >> i know. i'm going to watch that call >> joe, i hate it. >> i am hoping for it to be wrong. >> my wife said, why are you so positive i said, i know i should turn, i just can't >> you need to yore hu'alf full better to be half empty. thanks, jim. johnson & johnson is a baby company. but

it was day one for chair powell. the fed chairman testify before lawmakers on the house and dental services committee, addressed the central banks outlook, uncertainties weighing on it, and how long he intends to stick around. chair powell: the overall economy is performing reasonably see what we call crosscurrents. 3.7% is a low on implement rate -- unemployment rate, but to call something hot, you need to see heat. while we hear reports of companies having a hard time finding qualified labor, nonetheless we don't see wages really responding. i don't really see that as a current issue. the bottom line for me is that the uncertainties around global growth and trade continue to weigh on the outlook. in addition, inflation continues to be muted. the law gives me a four-year term and i fully intend to serve it. shery: we welcome the president of -- great to have you both. let me get started with you, ed. investors at the moment seem to be taking chair powell's comments as a done deal for a rate cut. would that be your t

powell's comments essentially confirmed that.robably another 25 basis points in the fourth quarter. we think the ecb is going to be a little more gradual. we think the fed goes in july and the ecb goes in september. with think the fed goes 25, the ecb goes by 10. in terms of who is moving the quickest, we think probably the fed has the greatest impact on currencies. david: but i have to wonder -- lisa: but i have to wonder, do you expect anyone to talk about the strong dollar at this point given the fact that president trump is trying to get the dollar lower? luke: i fully expect that companies will, as always, use the dollar as an excuse. i think that tradition is fully entrenched, but i do think it matters for the multinationals going forward, and that dollar strength starting to wane. we seen a weird combination markets lately where u.s. stocks are still outperforming generally, relative to msci and the world, but you would expect to see more domestic related strength. i think that is where the dollar tie-in recently is really

as i said, what does jay powell signal?ow does he handle this point where the fomc itself may not have its mind fully made up ahead of the meeting and this is on july 31? paul: kathleen hays, thanks for joining us. still to come, urgent and desperate. how the trade war is threatening the existence of many chinese factories. our exclusive interview with the head of the world's largest supplier of goods. shery: wells fargo offers us arguments to shifts to riskier assets. stay with us. this is bloomberg. ♪ paul: we are counting down to the sydney open. a cool and clear morning. futures pointing higher by half of 1% right now, following mixed positive day in u.s. equities. i'm paul allen. shery: i'm shery ahn. let's have a closer look at the u.s. market action. late&p 500 eeked out a session gain. a rally in the faang stocks helped offset losses in material and consumer staples. su keenan has more. who can blame investors for being more cautious given where we are headed into this week? su: everyone seems to believe there will

jay powell in the line of fire. president trump keeps up the pressure to cut rates as the market prices out further rate cuts this year. erdogan flexes his muscles. did turkish president fires the head of the central bank -- the turkish president fires the head of the central bank. the lira falls, equity sells off. david: welcome to "bloomberg this monday, july 8. a little something going on in france. it was a great game. aix: their second win in row? david: that's right. alix: even president trump took to twitter to congratulate the team, versus a couple days ago, when one of the women said we are not going to the white house, and he said why don't you win first. now apparently very proud. david: it was a great game. the u.s. was really taking it to the netherland for the first half, but they kept it up in the second half. alix: go team usa. in the markets, you have powell coming out in the next couple of days. drive up market reaction for this week. euro-dollar lower by 1/10 of 1%. the dollar getting a little bit

what does jerome powell do now?nk the testimony will be crucial around the evolution of the u.s. economy. monthly to look at data. clearly,average it out u.s. jobs growth has decelerated and we are not seeing as we saw friday night growth in the wages, which the inflation is crucial. it is still missing, and adding to the pressure president trump, piling on again, calling the fed the most difficult problems, saying jerome powell doesn't have a clue. does this theme of attacking central-bank heads disturb you at all? we are seeing it in turkey and india. anne: it is unhelpful, particularly when faced with challenging signals from the economy, not just domestically but globally, enabling them to focus on the job at hand which i am confident with powell and his colleagues will do what is appropriate as he said he will act appropriately to support growth. what does working appropriately mean to support growth? it would be hard to understand what the fed means when it comes to how much is appropriate and when is it appro

as usual, powell led us down.the markets certainly weren't thrilled at the quarter-point cut. many investors had expected a full half point reduction. but the dow really went into a nosedive, down near 500 points after jerome powell seemed to suggest it might be one and done as far as lowering interest rates. >> we're thinking of it as essentially in the nature of a midcycle adjustment to policy. >> the markets climbed part way back up the ladder after powell clarified that the fed wasn't rolling out more cuts as needed. if president trump wasn't worried solely about interest rates. the fed's program of so-called "quantitative tightening" was also on his radar. >> for them to have done quantitative tightening and also higher interest rates simultaneously, i think was a big mistake. we have the all-time high in the history of the stock market very i think i would have been 10,000 points higher and i think we would have been in the 4 for less gdp. >> powell said the fed would end its policy of quantitative tightenin

the president says jay powell has let the country down. the move sent wall street in months.e most and trade talks go back on hold until september. no progress in shanghai, but washington says the brief meeting was constructive. break downr, we will qualcomm earnings and the challenges it is facing with bloomberg intelligence. first, let's get you started marketsheck of how closed this wednesday session. it was a down day across the board. every sector in the red. we had that 25 basis point cut from the federal reserve, but it was taken more as a hawkish cut with chair powell's comments. we saw significant pressure there. we have seen a roller coaster ride throughout the session. the s&p 500 did rebound a little bit when fed chair powell did not completely rule out further cuts. the nasdaq was down more than 1% and we continue to seek u.s. futures under pressure. 10-year yields were pressured for a fourth consecutive session, although two-year yields jumped. not really yielding significant progress causal -- not really yielding significant