tom: we address stan fisher's fabulous speech yesterday at columbia.tions in honor -- jonathan golub, you have these memorized. what this means is low yields forever. right? jonathan: those of the first time i have seen those in a while. here is the question for stocks, not whether they are earning more money, but in an environment with low inflation and low growth, are stocks worth more? i think the answer is, yes. tom: the idea of earnings divided by the yield flipped by we need to getdo used to a 50/50 environment? are you kidding me? do you -- do we need to get used to a nifty 50? jonathan: the fairmont on the market is probably in the low 20's given where interest rates are. tom: this is going to come back to haunt you. [laughter] from your perspective, if you add dividends and buybacks, which is what companies are paying out to shareholders, stocks are yielding 5%. that is an unbelievable number right now. tom: that is unreal. we are going to do these equations with peter tague, with citigroup, he took these in a agose on thursday 42 years in col

♪ >> i'm not so sure that june is out. , weeard from stan fisher heard from williams in san franciscond they all seem to get it. they also to know that at some point they should be raising interest rates in order to preserve a semblance of profitability for savers and the like. the most influential bond investors as well as the head of the new york fed are signaling the u.s. central bank in on calls to raise rates but markets are not listening. despite those warnings from bill gross, mohamed el-erian and mark easel and william dudley. markets are pricing in a single fed rate hike this year and not until december. with me is the international chief investment officer at j.p. morgan asset management. 8% is june. 22% is july them a 35% in september. 37% november. 52% is when we go above 50%. are you more on the fed side or the market side? >> i'm with the market on this but i like the summers and i think they're high in terms of what their pricing in for a rate hike. >> if you think with the fed want to do every meeting has to be a live meeting. has to be too -- two way. they done the ri

i mean, we have heard from stan fisher, we have heard from williams in san francisco and they all seemt it. they all seem to know that at some point they should be raising interest rates in order to preserve asemblance of profitability for safers and insurance companies and the like. >> you in your most recent economic letter to your clients suggest we're going to see q.e. 4. you don't see convinced that the fed should be raising rates or will be raising rates? >> i think they should raise rates in order to give safers a break at the bank and their money markets. i think at the same time that the fed probably has to support the market that is the bond market, the long bond market, quantitative easing. this has to be a slow delicate process if they are going to raise rates and there can't be a lot of volatility. i think 2 e has to come back at some point if only to provide funds for fiscal spending. there is the thrust. when you talk about helicopter money and milton freeman and ben bernanke and dropping cash from helicopters, what they're really talking about is fiscal spending and pay

we heard from bullard and stan fisher. they all seem to get it. they should be raising interest rates in order to preserve a semblance of profitability for pension funds, insurance companies and the like. >> the more you read the details, the more solid the report becomes. i think this report is a harbinger of what is to come in the job market. 160,000 job growth is solid job growth. wage growth and 2.5% is good. if you look at aggregate hours, it was a .8% which is the strongest since march 2014. yvonne: if you're wondering what the fed might make of this latest signal, stick around with her interview with san francisco fed president john williams later in the program. we will have an extended roundup of the week's earnings report. you are watching "bloomberg best." ♪ yvonne: this is "bloomberg best." major news from companies like google. let's begin with the central bank decision that took many people by surprise. >> the aussie dollar taking a tumble. fresh record lows. an unaffected move aimed at countering inflation. everyone started thinking

many argue that stan fisher is in that camp, that all the things we've done aren't working like we thought they would. maybe there are negative consequences. you see everybody come down and see the dollar doing what it is, there's a lot of gamesmanship going on and i'm not sure the fed's making it any easier to deal with the volatility. >> keith, let me go back to you. what's on your shopping list should the prices go down? >> i'm telling you. what i'm taking profits very cautiously, i'm considering taking stocks in amazon. that's overweighting. underweighting i'm looking at agricultural tech, for example. they're not properly recognized. the mon santos deal is a key player for me. >> kenny, before we head to the close door we wait for the fed meeting or what catalyst are you looking for to move this market one way or the other? >> well, listen. she's going to speak again june 6 they say live. i think they'd like to push it to july. friday's going to bring us a report. it's expected to come in at plus 160. so that's not really a positive number or a reason for them to be so anxious. my que

stan fisher, big groan on the floor, didn't go tlment i don't mind. that sometimes surprise is the best way to do this the things right so you don't have a tail of people behind you scratching their heads. deal it with on the fly. it's been a long time. we put out all the warnings. we've sent out the flares. come on. you know, it's all about the dollar index in my opinion. if i showed you fives, threes, sevens, they would look similar to that. but whether you start to expand it a little bit, that's where you learn a lot. so let's go to the march 15th of this year. why? because virtually yesterday put us on a closing yield. we haven't seen that since that mid march point. what i want you to focus on is right around there in april around the 22nd. you had a spike in yields. two years are above that. but as you look at the dollar index, the next chart, very similar formation. also relative to that spike in april. now look what happens when you look at ten year. we're below it. look what happens when you look at boons, we're well below it. you get much le

fed vice chair stan fisher, he speaks, he's thought to be by markets more hawkish than fed chair janetw york fed president bill dud li. he'll give a speech and take questions from the press that could further press the case that, simon, investors may need to be prepared to trade fed fund futures from the beach this summer. >> yeah, i hear janet yellen's also pencilled in for harvard potentially on the 27th. >> yeah, there are some other speeches before that too. >> okay. all right. for more on this and where we are with the markets, let's bring in a global quantitative strategist with wells fargo and a global market strategist with j.p. morgan funds. samir, clearly a big divergence between where the market is and where the fed is on two to three interest rate hikes for the year. how live an issue is this for you as an investor or for someone who's advising investors on what the market will do? >> it's not really that big an issue because, again, you know, whether they raise rates once or twice or even three times, it all comes back to the economic data. if they're doing it on the back

three key players on the rate setting federal open market committee along with janet yellen and stan fisher. dudley thinks that the data is going to improve whether it comes to the fed hitting that critical 2% inflation goal. >> i think if you look at the labor market data really closely, maybe can you see the signs of a little bit of an uptick in wage inflation pressures. so that is also consistent with the notion that we're getting closer to full employment. so in general, i think i'm pretty confident that we're going to get back to 2% as long as the economy continues to grow and is somewhat above trend pace that leads to further tighten g tightening. >> they're quick to caution there, making my promises here of a hike and the intentions to raise interest rates have been derailed before by weak u.s. growth. the best can you say is they think the data will break their way by june. and if they'll hike around then. and a hike around then if it does. just to be clear about my personal breathlessness, we're talking about a quarter point. >> and the markets -- i'm breathless. it's 25 basis poin

we had that from stan fisher. we are with williams at san francisco. they all seem to get it. point, they are raising interest rates. movements of profitability and insurance companies. in your most recent economic letter, you said you will see qe4. you are not convinced that they will be raising rates. bill: i think they should, and order to give a break at the bank. but, at the same time, i think the fed has to support the long bond market. this has to be a very delicate process. there cannot be a lot of volatility. i think that qe has to come back at some point, if only to provide funds for fiscal spending. are talking about helicopter mining in milton friedman, and ben bernanke dropping cash from helicopters, what they're really talking about is that this spending is being paid for. it is not very easily done. it is more easily done that in the private market. tom: we need to mention the markets right here. the two year yield has moved dramatically. i just put out on twitter and on bloomberg radio plus that the two-year chart is well over standard deviations of a lower yie

as everybody knows, we listen closely to fed vice chair stan fisher and bill dudley at 10:30.ong the idea of a june rate hike. it's very interesting. it would have been more interesting -- never mind. >> 150 seems like a low-ball. >> you have to get used to that number. >> a low bar. >> it's the right bar. it's the bar that keeps the unemployment rate either steady or slightly falling should be the bar for the fed to raise rates. not -- >> you said it could be even below 150. >> it could be. 200 is too many. i don't many too many jobs. it should not be a sustainable rate, by the numbers. we have a really smart guest here. >> steve? >> yeah. >> can you stick around? >> i may can stick around. >> bring in julian -- they have to put that in there or i would have -- julian, u.s. equity and derivative strategist at ubs. did you get anything out of that? >> absolutely. the fed has taken the narrative back from the markets this week. the markets are now coming towards the fed for literally the first time in a year and a half. as we see this morning from the world's biggest retailer,