michael: we are speaking with robert kaplan on bloomberg television and radio. w surprised are you that unemployment has gone this low without triggering inflation? is there a change in inflation dynamics? robert: i'm not that surprise, we've been talking about the cyclical and structural elements of emplacement. unemployment being low would have triggered more cost increases, wage increases, it would have led to price increases, that's not happening because of structural issues, technology. of the distributed computing power has really changed the ability of businesses to change prices. i think a good part of this inflation picture a structural, and not going away. i don't know if that is susceptible with monetary policies. i take a different view of how we ought to think about this. i would like us to take action to get to the 2% target, but not at the expense of financial stability and creating undue access. -- excess. michael: what are we going to see? robert: i think it's important that we highlight explicitly that we will consider financial stability. i thi

that's the view of the fed robert kaplan. we'll bring you that exclusive, next. this is bloomberg. ♪ is "daybreak: europe." nejra: economic growth was modest in the final weeks of 2019, according to the beige book. the report supports the decision to leave interest rates unchanged in december. the san francisco fed president said the economy is in a good place following three rate cuts in 2019 and is positive about the fed's inflation target. goinflation will gradually back up to target and reach a sustainable 2% in 2021. outdone, the be dallas fed president robert kaplan told bloomberg in an exclusive interview that the isacity of the u.s. consumer strong. >> there may be months when the consumer pulls back and saves mourn doesn't spend, the but -- but the capacity of the consumer to spin is solid. household balance sheets are in much better shape than they've been in 10 years. not perfect, but in better shape. the consumer has the ability to spend and over time, i think that will. can i just take a little further, he warned about risk asset valuations and expan

plus, an exclusive interview with dallas fed president robert kaplan. the central bank should rein in its asset purchases. >> growth in the balance sheet is not free. there is a cost to it. juliette: next, more of the week's top headlines. >> u.k. inflation data at a three-year low in december. juliette: this is bloomberg. ♪ juliette: this is "bloomberg best." i'm juliette saly. let's continue our global tour of the top stories. taiwan reelected their pro-independence president in a landslide. >> taiwan's president has won a landslide victory to clinch a second term. the win is being seen as extending the fourth quarter market rally we have been witnessing. >> what most have been saying over the weekend is this is pretty much a referendum against what they saw as chinese interference in the election, or attempts to interview in that interfere in this election as well as a rebuke for the desire for more closer ties with the mainland. those strategies pretty much backfired, so the kmt did pick up a seven-seat gain in the legislative, but the party keeps t

we also speak to the dallas fed president, robert kaplan at 3:30 p.m. london time.'s get straight to the bloomberg first word news. now, u.s. story for tariffs on china staying put. the trump administration is likely to keep them in place until after the presidential election. any relief is also contingent on compliance. steven mnuchin and says tariffs won't be removed until the next stage of a trade deal. >> these tariffs will stay in place until there is a phase two . if the president gets a phase two quickly, he will consider relieving tariffs as part of a phase two. it has nothing to do with the election or anything else. >> today, the u.s. and china are scheduled to sign their phase one trade deal. $1 billion is the figure by which jp morgan's fixed income beat revenue expectations. citigroup debt traders posted a jump that was more than double expectations. the surge at both firms helps them notch up the best trading year since 2016. the trump administration plans to restrict the media's ability to pre-prepare economic stories. at the moment, the u.s. hosts a

jonathan: one crack in the federal reserve from robert kaplan, speaking on bloomberg. take a listen to what he had to say. >> there are three aspects. rates are lower. then there is the perception that the bar is higher for future rate increases. the third issue is in order to address this repo issue, we have grown the balance sheet. all three of those actions are contributing to elevated risk asset valuations. i think we ought to be sensitive to that at the fomc. this audience for this program is incredibly sophisticated, i imagine a large portion of it will take the view of neel kashkari. is there a risk of being too smart about this problem right now, if we can call it a problem? and read through what the fed is doing into broader financial markets? lisa: the risk is markets have become accustomed to us liquidity. whenever the fed tries to pull it away, they create problems. we saw that at the end of 2018, beginning of last year. they had to reverse the hiking cycle. at the end of the day, growth is not change much. 2018, itrengthened came off in 2019, but we are st

and i think that's what robert kaplan is concerned about and also wary of it can lead to further problems down the road if you keep expanding the balance sheet as they have done as they announce this whole repo facility program. >> as a central banker, do you worry about a new paradigm where tariffs become the norm in the future >> yes. >> and trade wars become the norm and how you as central bankers model into the economic forecasting? >> i was raised on -- remember, i'll be 71 in march. i happen to be a free trader i worked for bill clinton on that he was a free trader george h.w. bush we set a lot of this stuff in place, was a free trader i'm not a big fan of tariffs but on the other hand, if somebody violates the system so obtuseely has as china has done, somebody had to do something to make them realize they're being detected in terms of their misbehavior in the marketplace in trading goods i understand this having happened i'm not fully against it i just don't want it to become the norm. >> hasn't it already, though >> the well, we'll see. >> it's not just with china. >> i agree we'

presidentllas fed robert kaplan is saying we have to address the fact that this flood of stimulus isically causing asset valuations to blow up. i don't disagree with what he is saying. the question is, how can the fed communicate that without giving that overly hawkish vibe that the markets definitely don't want to see today? i think it is going to be a challenge. mike: the commodity market is telling me that we are one stock away from negative rates in this country. alix: the market is already pricing in a cut. mike: but commodities are saying they should be cutting. cole: i disagree, for the reason that the housing numbers were knockout, mind blowing lay good, way better than the street shot. mike: there's a great investment the next five years, housing. they might pay you for your mortgage. [laughter] alix: aren't they doing that in denmark? switzerland. what do you guys think about the market pricing in a fed cut? are we going to look at a fed that is going to be more hawkish? damian: i think it is the messaging. if chair powell is questioned about what i just mentioned with robe

haidi: dallas fed president robert kaplan speaking exclusively with bloomberg. turn back to sophie and hong kong. enthusiasm for the trade one sick -- phase one trade deal. the sydni sharemarket gaining ground. rising. easing boosted their boe bets. we do have it on course for a second weekly loss. u.s. retail sales are due later this thursday. the offshore yuan not budging much as the trade deal signed. currencies,eal on not much new. sticking to a 6.85 forecast. we do have onshore options traders anticipating more yuan withess given the risks the next talks and u.s. presidential election. avoidsgreement competitive devaluations, but currency watchers mostly unimpressed. let's take a look at what this means for the dollar and yuan. global strategy, david bloom, joins us. investors were unimpressed because this isn't outdated -- is an outdated story. i want to throw up this chart to yuan.e runup in the the highest in july since the signing of the phase one trade deal. going forward, are the drivers in terms of influence going to be sustainable for the chinese cu

with the likes of robert kaplan coming out, talking about how he might be worried that the fed is contributing to the run in risk assets, from your point of view, you think there's any possibility that we hear further discussion on this topic from the fed? vince: they may have some internal discussions. most people are looking at this as a placeholder meeting. if other fed members weigh in in that regard and pretty much repeat what kaplan said, i think that does play on markets. then you are getting the sense that more fed members are worried that bubbles are percolating. so far they have basically said there is not an issue. we are data-dependent. don't worry about it. >> you raise a really good point. if you look at trading now, you are seeing increased expectation for a fed rate cut. how concerned are you about the lack of volatility, the fact that we still haven't seen a down 1% day in 2020? are there consequences to that percolating right now? anthony: i think when you look at the fundamental picture, there are reasons for stock prices to be at these levels. the you look at valuations, ma

robert kaplan is fairly neutral, loretta mester from cleveland is on the more hawkish side.gail: coming up on "bloomberg best," policy insight from two top fed officials, the chicago fed president charles evans and 2020 fomc voter loretta mester. plus, brian moynihan shares exclusive perspective on the u.s. economy's not so secret weapon. spending, or is the engine sputtering? >> spending on things versus experiences. abigail: this is bloomberg. ♪ whether you're out here on lte or here on a wifi hotspot, xfinity mobile has more coverage to keep you connected to what matters most. moooo. that's because it's the only wireless network that automatically connects you to millions of secure wifi hotspots and the best lte everywhere else. save up to $400 a year when you switch. plus, unwrap $250 off our best phones. click, call or visit a store today. abigail: welcome back to "bloomberg best." we spent time during the first week of 2020 looking at trends that will matter to investors in the year ahead. for anestin sat down exclusive conversation with bank of america ceo brian moyni

later on today, we speak to dallas fed president robert kaplan.e suggested a bit of volatility in financial markets resulting from geopolitical tensions might not be a bad thing. don't miss that conversation at 3:30 p.m. london time. manus: coming up, we look at the yuan's strength. this is bloomberg. ♪ ♪ nejra: this is "bloomberg daybreak: europe." manus: i am manus cranny in dubai. ,et's stay with the china because the central bank added liquidity. to help offset that squeeze in the year ahead, that is really for the lunar new year ahead holiday. edging a, the yuan little bit lower today as we started the conversation. there is a chart that matters. dani burger, wind me up. dani: i would love to. over the past few days, it is clear that the yuan bears have been in full retreat. there has been a clear change in positioning. over the past two days, volume in the onshore currency has spiked about 40 billion. that happened two days in a row. last year, that level was only surpassed three times. with china getting its removal of the tag of a currency

robert kaplan is fairly neutral, loretta mester from cleveland are on the more hawkish side.gail: coming up on "bloomberg best," policy insight from two top fed officials, the chicago fed president charles evans and 2020 fomc voter loretta mester. plus, bank of america ceo brian moynihan shares exclusive perspective on the u.s. economy's not so secret weapon. can consumers keep spending growth humming along or is the engine starting to sputter? >> there is difficulty about spending on things versus experiences. abigail: this is bloomberg. ♪ beyond the routine checkups. beyond the not-so-routine cases. comcast business is helping doctors provide care in whole new ways. all working with a new generation of technologies powered by our gig-speed network. because beyond technology... there is human ingenuity. every day, comcast business is helping businesses go beyond the expected. to do the extraordinary. take your business beyond. abigail: welcome back to "bloomberg best." we spent time during the first week of 2020 looking at trends that will matter to investors in the year ahe

the interview yesterday of robert kaplan was really interesting on the regime ship -- the regime shiftng right now back down to lower rates. francine: i have a good spread between the two year. that's get to first word news in new york city with viviana hurtado. viviana: hours from now, u.s. house impeachment managers return to the senate floor, where they will read out loud the articles of impeachment against donald trump. afterwards, the u.s. supreme court justice, chief justice john roberts, will be sworn in to preside over the trial. the full trial begins next tuesday. the agreement between the u.s. and china bring in clarity. the markets rocked by the trade war. credit card stocks were among the big gainers paid company like visa and mastercard moving closer to gaining assets to the chinese payments market. commodity market got some numbers on china's commitment to buy foreign products. but some doubt remains. the leader of hong kong says the city's one country, two systems framework could last until the 24/7 -- until the 2047 deadline. carrie lam said hong kong enjoys freedom tha

. >>> could geo political tengs change the fed's interest rate robert kaplan joins us, he's a votingember this year. >>> as the u.s. braces for retaliation from iran, how likely is a cyber attack and what could be the primary target that is all ahead on "the exchange." "the halftime report" is back right after this through the airport. with ship skis, you're just a few clicks away from having your skis, snowboard and luggage shipped from your doorstep to your destination. with unrivaled pricing, real time tracking ship skis delivers, hassle free. ship ahead and go catch those first tracks on fresh snow. ship skis. your skis. delivered. >>> welcome back some analyst calls that we're following today. just want to hit some more stocks with you guys humana doc, added to tell conviction buy list at goldman sachs one that cramer highlighted this morning on "squawk on the street." reiterated by 425 bucks the price target for humana. >> you'd be hard pressed to find somebody in the healthcare space that's better at virtually everything they do than this one. so i'm not surprised to see 'em a

point with you i want you to take a listen to something that current sitting dallas fed president robert kaplanour steve liesman, the idea that the u.s. is in a very different situation with regard to its energy profile >> i think you would have gotten a different reaction ten years ago. certainly 20 years ago and i thinking it's indicative of the united states now producing 12 million barrels a day where we rival russia and saudi arabia in terms of energy production, we're much more energy self-sufficient >> dallas fed presidents are always keenly aware of the energy markets, as you are and have been in your past does the u.s. economy get threatened at all by any kind of geopolitical tension or is it just this island of safety, like you said >> well, you always have to be on guard we always have to be alert we could be attacked again the fact is that we -- everybody else -- remember, money is relative it goes to the most attractive spot relative to the rest of the world, we're in the prime position here in the united states, separated by oceans, having the permian basin, having an entrepreneur

. >> yesterday, dallas fred president robert kaplan talked about a bit of nervousness he's have withlling excesses with the growing balance sheet. we see that balance and it was approaching 4.2 trillion and the "wall street journal" had an article today that over a 12-month plus period, 40% of listing companies are losing money. they highlighted ge and tesla. wrap all of that up for me it doesn't sound to ne that that would be the type of foundation to see stocks at this level or remain at this level. >> sure. so there's a couple of things going on one is, and i appreciate the shout out to the h 41 which is the federal reserve release where you can see it every thursday afternoon, that monetary policy shouldn't be measured just by the basis point terms of where the feds fund rate is. you should blolook at the size the balance sheet, and the fed has made its balance sheet big, its brief experiment in shing g shrinking the balance sheet didn't work out how they wanted. the issue is big banks want to sit on reserves and that is probably distorting the front part of the yield curve, ie m

robert kaplan of the dallas fed, i take my hat off to him being first fed official to come out and say, market perceives not qe propping up share prices, by definition if we pull back, markets perceive it as a form of tightening. stocks will then decline. i want to point something out. we had weak pending home sales report today. we have seen the yield curve, the difference between the three month and 10-year come almost all the way back. we're just five basis points away from that curve reinverting. he spent $400 billion uninverting it. looks like he will have to write a bigger check. charles: for both of those things, i will ask you, jeff saut, pending home sales also we saw where supplies is at the i think lowest level level for 100,000-dollar homes. there is no starter homes. there is no supply out there and secondly when the global economy is in trouble, there is a lot of concern as there has been over past week with the coronavirus only naturally money flock to our bonds. that skews the yields a little bit. we can't look at inversion right now we might have traditionally looked a

dallas fed president robert kaplan told us the capacity of the united states consumer remain solid.may where the consumer pulls back, saves more, does not spent. but the capacity of the consumer to spent is solid. household balance sheets are in better shape than they have been in 10 years. not perfect. we know the job market is very tight to the consumer has the ability to spent and overtime, i think they will. anna: simon french is still with us. do you think the fed fancied and easy year because they set the bar high for any move in interest rate policy in 2020? simon: i think over the last few years, the best communication strategy for the federal reserve -- they have said to the marketplace we are not going to be buffeted by short-term movements. be when thosemay points arrive, the behavior will change what i think it has provided a high bar for a policy change and in the u.s. economy were graded -- credit availability, cost of credit does not appear to be a constraint on activity. i think that is a smart move. matt: it is not the same everywhere. you are not looking for moves

alix: let me just get on that because i spoke to robert kaplan yesterday, and finally somebody admittedrepo thing to expand the balance sheet was playing a role in risky assets. said we need to be finding ways to limit and temporally growth on the fed balance sheet, but i'm confident all of those actions are could to reading to -- i'm confident all of those actions are contributing. there was a result. jeff: obviously there is a factor. it is not really something where the market is having a problem with it right now. in general, we are not seeing a market that is in need of more qe, at least not out of the u.s. i think the more interesting thing in 2020 is going to be around fiscal stimulus. there's of number -- there's a number of countries talking about budget expansion this year , even germany. i know they are on the green this --ause they have we will hear more from christine lagarde and the ecb later. her pushes more around the fiscal side and burning governments back into the equation. vincent: i totally agree. we saw it when we mentioned tax cuts. we'll talk about this a little

on bloomberg markets we will have an exclusive interview with dallas fed president robert kaplan. 10: now we want to give you an update on what is making headlines outside the business world. viviana hurtado is here. viviana: a beautiful monster of a trade deal. that is how donald trump described the agreement with china. today he is set to sign it. it is phase one of the agreement. fora could be punished violations on currency, intellectual property, and the trade tariffs. u.s. tariffs on chinese imports will stay in place until at least the election. if the countries signed a more extensive deal, more tariff relief would be considered. today the houseboats to send impeachment articles against president trump to the u.s. senate. that would lead to a trial early next week. the president has yet to settle on his defense strategy and the lawyers that would represented him. the republican senate is almost certain to acquit him. president trump former national security advisor michael flynn now wants to drop his guilt to -- his guilty plea, just as joe weeks before he was sentenced in the

percentage point or more off of global gdp earlier today on cnbc, fed president charles evans and also robert kaplann on the escalating tension and the political economic fallout >> the fmoc has positioned us well for 2020. we've got some risk management positioning in the current setting. and i think it's one where inflation can go up above 2% that's without any oil price that put another story into play >> in terms of energy production, we're a lot more energy self-sufficient so because of that, you'll see these events in the middle east. they'll have an effect, but it's going to be more muted than we might have seen historically >> meantime, mike, we did get those fed minutes. looks like risk of recession seems to have dulled quite a bit, at least from the fed standpoint >> for sure. and most of the commentary within the minutes is that the committee is very comfortable with the fed doing nothing from this level and the real hope and the expectation and the intention, all of those things come together, we hope that the data coming in substantiates that stance and you know wing the market should b